German Finance Minister Wolfgang Schauble urged lawmakers to back the third bailout for debt-stricken Greece, highlighting that it offers a "sustainable path" even though the IMF remains hesitant on whether to join the aid programme. Yet, German Chancellor Angela Merkel said that she expects the lender of last resort to sign on in the fall, after the first progress report.
Meanwhile, Fitch Ratings upgraded Greece's credit rating to "CCC" from "CC", saying the agreement between Athens and the European Institutions reached last week on the framework for a third bailout programme has lowered "the risk for Greece defaulting on its private sector debt obligations". Yet, these ratings are both well below investment grade. Fitch also added that "the risks to the programme success remain high. It will take some time for trust to be restored between Greece and its creditors, which increases the risk of delayed programme reviews. Meanwhile, the political situation in Greece remains unpredictable." At the same time, the ECB reportedly lowered the ceiling on its emergency lifeline for Greek banks, signalling that the nation's lenders are building cash reserves. The central bank reduced the ELA by around 1.3 billion euros to 89.7 billion euros, increasing confidence in the country's banking sector after Athens sealed a bailout deal with its European creditors.
Upcoming fundamentals: Fed minutes in perspective on Wednesday
The Federal Reserve will publish its minutes of the most recent meeting later today, as markets expect to see some hints of a possible rate hike in September. Meanwhile, US will also release data on consumer prices today, with inflation reading estimated to pick up from 0.1% to 0.2% in July. While FOMC minutes are due at 18:00 GMT, the CPI numbers will be published by 12:30 GMT.
EUR/USD attempts to rebound
After four straight days of losses, the Euro is trying to commence a recovery versus the American Dollar. Immediate support is represented by the 20-day SMA at 1.1032, which stopped EUR/USD from falling further yesterday. However, any revival will be difficult for them, as many resistances are spread in 20-30 pip ranges from each other, thus creating a dense supply area. At first, however, the single currency should attempt returning above the yesterday's open of 1.1075. In the meantime, bears feel more confident before US CPI and FOMC minutes are released, and 1.10 remains the main target for them.Daily chart
In the one-hour chart the pair is still moving along the two-month downtrend at the moment. On the other hand, an earlier surge in value and a following correction resulted in crossing an important 200-day SMA, currently at 1.1057. The spread between this line and the spot price is just seven pips right now; however, in case EUR/USD fails to return back above it today, then our outlook is likely to change back from neutral to negative.
Hourly chart
SWFX sentiment above 50%, pending orders neutral
Meanwhile, bullish positions at OANDA account for just 41.44% at the moment, while SAXO Bank market participants are also remaining strongly pessimistic towards the common currency, as the share of longs takes up just 31% on Wednesday.
Spreads (avg,pip) / Trading volume / Volatility
Community members expect Euro to strengthen by the end of the week
Traders see the pair to growing by Friday of this week, as the median forecast of Community members for the pair's close price on August 21 is 1.115. According to Fundamental Analysis Contest, majority of respondents believe that the upcoming data will have a bullish impact on the Euro vs US Dollar.
A proponent of a near-term growth, Khimitau, suggests that "the pair runs on a range consolidation between 1.0808 and 1.2220. After six days of bullish market and two days of bearish one I am expecting some support around 1.08."