EUR/USD likely to remain under pressure

EUR/USD is likely to remain under pressure and the US Dollar expected to remain bid during the week amid signs of waning market confidence according to the Brown Brothers Harriman, Global Currency Strategy Team. “The EUR/USD, in particular, is expected under pressure across as the combination of a potential Greek default, a shift in ECB posture, divisions between policy makers over how best resolve the ongoing debt crisis and funding worries about European banks continue to rattle markets.”

“With the CDS market pricing in an imminent default of Greece amid talks that the German government may be discussing an orderly restructure and press reports over the weekend suggesting that some large European financial institutions are facing the prospect of a credit downgrade due to their exposure to Greece, we suspect that the euro and broader market sentiment are likely to deteriorate further yet,” analysts affirmed at BBH and point out that a break of the EUR/USD below 1.3430 (February lows) could open the door for 1.3360 “and roughly a full retracement of the year’s entire move.”