Greece - the final countdown

There are some reasons to be optimistic that Greece will manage to forge a deal with its creditors by Sunday's final deadline. 

There has been talk that, discussions will take place as to how Greece can tackle its huge, unwieldy debt. Greece short-term financing deal could be on the table that would allow the country to repay the EUR 3.5 bln it owes to the ECB on July 20.  In turn this may pave the way for an injection of liquidity into the Greece banking system. But, in recent months it has been difficult to predict the action of Greece's far left government and consequently it is impossible to be predict whether or not Greece will soon find itself out of the Eurozone, says Rabobank.

These uncertainties make forecasting the EUR exchange rate very difficult. Signs that the EMU could be broken up will likely lend itself into a surge in downside pressure on the EUR. 

That said any sign that the system will remain coherent in the absence of its weakest link could then lend support. In the absence of decisive news one way or the other in recent weeks EUR/USD forecasts is unaltered and expectations of a moderate downside bias assumes pressure stemming from interest rate differentials, notes Rabobank.