Euro in a deeper crisis with Greece

With the second bailout having expired, Greece now needs to negotiate a third programme from scratch in order to access funding and reopen its banks; the alternative is EUR exit. 

Despite all this, our forecasts are unchanged EUR/USD is expected to remain rangebound in 2015. The uncertainty surrounding a Greek exit would make a September Fed hike less likely, but EUR is expected to be the main loser in FX. 

The ECB would be expected to ease further to avoid any threat of contagion while there is a long-term impact in turning EUR into nothing more than a fixed peg. EUR's reaction to Greek developments so far has been limited in part that seems to be market expectation that Europeans will "sort this out at the last minute" as that has been the lesson of the last five years. 

The FX implication is that EUR rallies should be capped. Technical analysts see the risks skewed towards a retest of the prior lows, says RBC capital markets.