EUR/USD Rallies Ahead Of Greek Austerity Vote, Will ECB Raise Rates?

EUR/USD ( Click for larger view
The Greek austerity vote is at 2pm Athens time, so 7am in New York. A strategist at BNP Paribas told CNBC that if the vote passes EUR/USD could hit 1.45. Look where the upper-bound of the descending channel hits today. There is still a sovereign debt crisis in Europe, but countries keep getting bailed out by the IMF, ECB and EU, and supported by China (good job if you bought the Euro after this news).

EUR/USD just broke out of a near-term downtrend, above 50 day moving average resistance and regained the uptrend line from January. It is rallying hard right now inside the green circle or mini symmetrical triangle. The question is, does it stick? Will the vote be a buy the rumor-buy the news or buy the rumor-sell the news catalyst. I will continue to watch 1.4281 as an important support level (blow off top on 11/4/2010) should EUR/USD rollover again. As you can see from the chart, whenever EUR/USD broke through that support level it has always been a decent short opportunity. So will EUR/USD hit 1.45 or 1.428 first? For thoughts on the Eurozone by market gurus see yesterday's Eurozone/Greece link fest. In the comment section I provided updates. Get ready for riots.

Speculation that the ECB (European Central Bank) will raise interest rates next week "to cool inflation" could also be supporting the Euro. Another article: Stark Says ECB Is 'Very Vigilant,' Ready to Raise Rates (SF Gate Bloomberg). Should the ECB be raising rates? Read this: Red Lights Flashing For Eurozone Growth (Economonitor). According to Investors Business Daily, "German consumer prices rose 0.1% in June and were up 2.3% vs. a year ago, unchanged from May and above the European Central Bank's annual inflation target of just below 2%." 

In other interesting interest rate news, the market is pricing in rate cuts in Australia, but strategists and economists think it is wrong: Australia OIS Mkt Defies RBA Hawkish Stance By Pricing Cuts (Automated Trader), Euro woes lift chance of rate cut by RBA by January (Australian).