The Fed's monetary policy and the debt talks between Greece and its creditors were the main events this week. Investors hoped for signals when the Fed starts raising its interest rate. They were disappointed as the Fed Chair mentioned that the interest rate may be hiked twice this year, but she added that the hiking of the interest rate will be gradual. The timing was not mentioned.
The Greek debt talks ended without any deal this week, the same results as the last week. All those involved in the debt talks said that a deal still possible. I think there is hardly anyone, who thinks that a deal will be reached. It seems that no one would like to make a decision. Even if both Greece and it creditors think that the Greek exit from the Eurozone may be the right solution of the problem, nobody feels responsible to make this decision.
The Greek debt crisis is becoming more and more a political problem, not an economical problem.
Markets are expected to be volatile as investors remained focussed on the Fed's monetary policy and on the Greek debt problem. It is likely that the currency pair EURUSD will test the level $1.1200, maybe even the level $1.1100, if a deal between Greece and its creditors is not reached. If the results of the debt talks are positive, the currency pair EURUSD may test the level $1.1400 or $1.1500.
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