The euro continues to
post gains on Tuesday, as EUR/USD trades just above the 1.13 line in the European session.
On the release front, there are no eurozone economic reports. EU finance
ministers will meet in Brussels later in the day. It’s a busy day in the US,
with three key events on the calendar – Core Durable Goods Orders, CB Consumer
Confidence and New Home Sales.
Greece
remains the focus of the markets as voters gave a sweeping mandate to the
far-left Syriza party. Syriza ran on a platform of ending the crushing
austerity scheme which Greeks have endured as part of the €240 billion bailout
negotiated between the EU, ECB and IMF. Predictably, the euro fell immediately
after the election results, slipping to the 1.11 line. However, the common
currency has recovered nicely, gaining about 100 points on Monday and
continuing to move upwards on Tuesday.
Syriza’s
win certainly throws a monkey wrench into the Greek bailout program, but the
new Greek government is likely to negotiate a deal with Greece’s creditors. A
Greek exit from the eurozone may make for interesting headlines, but such a
scenario is extremely unlikely. Indeed, Greek Prime Minister-elect Alexis
Tsipras has promised to keep Greece in the eurozone. Still, there remains
plenty of uncertainty as to what will happen with the bailout plan, so traders
can expect events in Athens to have a strong impact on the movement of the
euro.
The
Federal Reserve starts a two-day meeting on Tuesday and will release a policy
statement on Wednesday. The Fed is expected to continue to counsel patience
regarding an interest rate hike, and persistently weak inflation means the Fed
can take its time before having to make a monetary move. The markets will be
combing through the statement and searching for any clues as to the timing of a
rate hike. This could have a strong effect on the movement of EUR/USD.
EUR/USD
for Tuesday, January 27, 2015
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