EURJPY Price Action Analysis - 50.0% Fibo at 133.56 to break for correction

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Sergey Golubev, 2015.07.10 09:24

BNP Paribas - How To Trade Greece's End-Game (based on efxnews article)

1. Sell EUR relief rallies against USD, GBP:

"This scenario produces a relief rally across most asset classes. European equities would rally and peripheral spreads would narrow. It is unlikely the EUR would appreciate broadly as it is difficult to argue that the single currency is trading at a discount to valuation. Outcome 1 would provide a catalyst for the re-establishment of EUR-funded carry trades," BNPP advises.

"Accordingly, the EUR should depreciate, especially against higher yielders such as the USD and GBP. A clear exception would be EURCHF, which is likely to rally in this scenario. The CHF has served as a safe-haven – as indicated by the net long exposure of +24.," BNPP projects.

2. Sell EUR/JPY:

"This is the scenario the market fears...We view that EURJPY shorts would perform even better in this scenario, as an anticipated delay to Fed tightening would weaken the USD," BNPP advises.

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Sergey Golubev, 2015.07.10 14:26

Morgan Stanley evaluated some long-term/short term scenarios concerning EUR in case of Greece (based on efxnews article)

Short-term evaluation:

• "Should Greece sign a deal, a short-term EUR rebound should be followed by EUR weakness as investors are likely to move back into EUR-funded carry positions."
  
• "Should Greece exit, the ECB may have to use its tool kit to keep sovereign spreads under control. Monetary easing should put the EUR under selling pressure. Ultimately, the ECB should be successful in controlling spreads, we believe."
  

Long-term evaluation:

• "A Grexit represents a fundamental shift for EMU with the loss of ‘irrevocability’ potentially turning the union into a club of fixed exchanges rates with the possibility to leave. Peripheral assets will have to trade at a risk premium, unless EMU authorities deepen integration via further banking union and fiscal integration steps. The ECB controlling sovereign spreads successfully could turn into a long-term EUR negative factor as it may not provide the necessary ‘wake-up call’ to European politicians to make the necessary reforms to avoid future market tension."