EUR review

Western Union notes: 

The Euro has shown some significant resilience as the Greek debt crisis is coming to some kind of deadline with Euro 1.6 billion of loans due at the end of this week. 

The resilience of the Euro is due to three factors; firstly deflationary fears in the Eurozone seem to have dissipated to some extent with inflation numbers from across the Eurozone showing that the pace of disinflation has ebbed significantly in the last two months. Secondly, Sovereign bond yields have surged higher on the back of disappearing deflation which has supported the upmove in the Euro. Thirdly, mixed data from the US has resulted in lower expectations of a Q3 rate hike by the Federal Reserve resulting in a weaker US Dollar across the board which has supported the move higher in the Euro. 

The market is cutting short Euro positions in spite of the Greek crisis and last week as per data from CFTC speculative short positions in the Euro fell 35 percent to 89.4 contracts in the week ending June 16. The Euro could trade in a volatile range this week and as is typical with Eurozone we could witness a last minute deal.