The EUR/USD remained under heavy pressures mostly on Thursday in the light of the downbeat sentiment in the market over the outlook for global growth and the deepening debt crisis.
The beginning of the EU summit did little to salvage the euro from the downside pressures and so did the Greek government's approval of the austerity plan, as the prevailing pessimism was stronger and keep the focus delayed on a June 28 decision from the Greek parliament on the austerity plans.
We can see the risk aversion the dominant factor and fears over the slowing global growth are only deepening after Bernanke provided a downbeat view on the recovery with downside revision to growth estimates and the EU leaders are still deliberating the next step for Greece with no new progress.
This sentiment is to be mainly carried into the end of the week, yet the main focus for Friday will be the EU Summit and the final communiqué. Shall the leaders provide a solid stance behind Greece and assure to markets that under no conditions will Greece be allowed to default, then that will be the first relief for the market, the second will be the U.S. GDP and the upside revision expected which if matched expectations or was even higher will also calm some fears over the extent of the slowdown in the recovery.
Those are the main highlights to watch and that can help ease the jitters, other than that, the selloff will continue and the dollar will remain the dominant factor and push the EUR/USD more to the downside.
Also, more data will be released in the European session with another sentiment survey due today from Germany with the IFO for June at 08:00 GMT. The Germany Business Climate is expected lower at 113.5 from 114.2; the Current Assessment to fall to 121.0 from 121.4 and Expectations to ease to 106.4 from 107.4.
Still, the eyes will be on the EU Summit and the full day of meeting and negotiations on hopes the leaders will be able to stem their differences on the second bailout for Greece a decision of which has been delayed from the summit and likely till mid-July. Comments from the leaders on the debt crisis and means to support Greece will be closely watched in the market.
It will be a busy end of the week for the United States as well with the heavy data for release at 12:30 GMT. The focus will be on the final first quarter GDP estimate, where growth is expected with an upside revision to 1.9% on the quarter from 1.8%. Personal consumption is expected steady at 2.2% as well as the Core PCE at 1.4%.
The Durable Goods Orders for May are expected with a rebound by 1.6% from 3.6% drop and excluding transportation at 1.0% from 1.5% drop.
Originally posted here
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