Euro Passes Another Test

As a Greek default creeps closer, the euro continues to creep higher. US traders sent the euro 80 pips higher on Monday despite a steady stream of troubling news on Greece. The RBA is in focus later.  The Each EURUSD and GBPUSD Premium longs are now +250 pips in the money, each, while AUDNZD is +30 pips in the Premium Insights.

At some point, there is no fighting the price action. Greek news is undoubtedly bad and late in the day, Varoufakis confirmed Athens won't be presenting any new concessions in a last-ditch meeting Thursday. That condemns Greece to default unless its creditors pull a total about-face.

In a sign that's unlikely, various reports have emerged about quickening preparations for a Greek default and potential capital controls. It has looked bleak in the past but in seven years of writing about Greek drama, it's never been this bad. It would take a small miracle to avoid a Greek default now.

At the same time, the euro just doesn't care. There is something to be said about unloading an anchor from the Eurozone and that might be how the market takes it. The euro is creeping back toward 1.14 once again it what would be the fifth test of that zone. That kind of price action is hard to deny.

That said, EUR/USD bears have two massive potential catalysts this week in Greece and the Fed. If those don't reignited the downside, it may be a quick rush to the exits in a move that could send the euro quickly higher.

Economic data added to the US dollar's problems Monday as it fell 80 pips against the euro and pound. US May industrial production fell 0.2% compared to a 0.2% rise expected. The Empire Fed was at -2 compared to the +6 consensus. On the flipside, the NAHB housing market index beat expectations and matched the best reading since the crisis.

Looking to Australia, the RBA's Debelle speaks. Yesterday, Kent talked down the AUD with some success but it proved to be fleeting as AUD/USD hit session highs in US trading at 0.7777.

Debelle speaks at 2155 GMT but the larger event is at 0130 GMT with the RBA minutes. They're likely to confirm a wait-and-see approach but any fresh bias could cause an AUD move. Also keep an eye on copper prices as they rebounded in US trading after a drop.