Traders Sceptical before EU Summit USD Gains on Safe-Haven Demand Before EU Summit

EUR/USD dropped to 1.2645 as forex traders remained sceptical about the outcome of EU summit today.
Political situation in Greece and OECD’ gloomy annual report on Spain renewed concerns that EU leaders are not capable of halting the crisis.
It’s unpredictable to see what will come out of the EU meeting that would stimulate markets. Greek elections on June 17 will determine whether it stays in the currency union. These are the main factors which have been supporting the US dollar for the last couple of weeks and will continue to support as long as uncertainty remains in the market.
Yesterday EUR/USD tumbled after a report that former Greek PM Papademos said that preparations for Greece exit are being considered.
Papademos said the exit would cost as much as €1 trillion, reflecting assumptions on market valuations, cross-border contagion and damage to the region’s economy.
Meanwhile, Fitch Ratings lowered Japan’s sovereign rating from AA to A+ with a negative outlook. Fitch Ratings also warned that further downgrades are possible unless the government takes new fiscal policy measures to stabilise public finances and its ratio of debt to gross domestic product.
Japanese Finance Minister Jun Azumi told reporters that he didn’t want to comment on the subject, while adding that the government will press on with tax and welfare reform to improve finances.
The Asian stock markets opened lower today. NIKKEI started the day at 8,715.14, previous close was 8,729.29. HANG SENG opened at 18,842.30, previous close was 19,039.20.
Chief strategist at Monex, Takashi Hiroki said “This is very speculative selling led by futures. Most of the investors are waiting for the EU summit today. There is no active trading in the market, so it’s futures selling by hedge funds”.
EUR/USD is trading at 1.2672 by the time of typing and for today resistances are located at 1.2719 and 1.2781. Support levels are 1.2620 and 1.2580.
GBP/USD is at 1.5759. Resistance levels are located at 1.5782 and 1.5824. Supports are located at 1.5740 and 1.5700.
USD/CHF is trading at 0.9472 by the time of typing and for today resistances are located at 0.9514 and 0.9560. Support levels are 0.9441 and 0.9397.
AUD/USD is trading at 0.9775. Resistances are located at 0.9842 and 0.9898. Support levels are 0.9751 and 0.9700.
The economic calendar is heavy today.
EU Current Account data will be released at 09:00 GMT. MPC Meeting Minutes is due at 09:30 GMT. UK CBI Industrial Order Expectations report will be released at 11:00 GMT.
Statistics Canada will release Core Retail Sales figures at 13:30 GMT.
US New Home Sales report will be released at 15:00 GMT.



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