By TraderVox.com
Tradervox.com (Dublin) – The EUR/USD is currently trading in strong bullish markets. The currency seems to be well bid supported by strong volatility and volumes. Technically the currency is likely to continue its upward momentum and may well close the trading session around the 1.327 levels.
However on the fundamental side we have a few risk events up ahead. At 12:45 GMT there is the ECB rate decision. The central bank is likely to keep rates on hold and may well keep away from citing any market mover talks as the ECB awaits the effect of the last weeks LTRO. The LTRO funding last week was one of the largest with the ECB handing out €529 billion of liquidity. The liquidity injection saw almost 800 Euro zone banks tapping into the LTRO to meet their funding needs.
This was not anticipated and raised concerns over the funding ability of the Euro zone banks and raised brows over the financial stability of the entire Euro zone. This resulted in a sharp sell-off in Euro and other risk correlated assets. The dollar benefited from this risk averse money flow and rose to 3 weeks highs.
After this sell off the Euro was lingering around 1.319 levels in the early trades of the week. However the currency seems to have found the boost today and is seen surging into bullish zone. This boost seems to be coming from the second and most important risk event of the day-the Greek PSI Talks. The Greek Government needs considerable participation in the PSI talks to initiate the bond swap deal. This bond swap deal is necessary and crucial for the Greece if it wants to avoid a disorderly default and also to enable it to get the next tranche of money from the European Union.
Rumors are spreading around that many PSI investors are positive regarding the bond swap and the country may be able to pass the bond swap, the details of which will be available tomorrow.
This optimism regarding the Greek PSI talks is fuelling risk sentiments driving the pound, euro and the commodities into strong bullish territory.
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