Looking ahead: July week 4

• EU -- Ongoing sovereign debt crisis
• Conflicting reports from weekend bank stress tests?  Monday could be chaotic, likely to SELL EURUSD (note Tokyo holiday)

• THURSDAY: EU emergency meeting re: 2nd Greek rescue package.  Traders do not expect players will find a compromise over their significant differences (Germany: private involvement vs ECB: no credit event).  SELL EURUSD favored, if no surprise compromise found...

•  USA -- debt ceiling
• Politicians dragging feet on 2 Aug deal.  Traders expect deal to be done (risk on?), but interim uncertainty = USD negative??

• USA -- credit rating downgrade?
• Possible notwithstanding result of debt ceiling extension.
• China says US will avoid default.

Sean at Forexlive.com says:

I’m thinking that a short EUR strategy for the first 3 days of the week but flipping into a long strategy as the emergency meeting looms, might work. Let’s see how it develops.