The deal on Greece put together during the latter stages of Friday gave the single currency a lift into the weekend; EURUSD moving up above the 1.14 level. That has struggled to be sustained though, as there are still doubts regarding the measures that Greece will commit to in order to secure the funding. They are due to put these to the Eurogroup today and if they are not accepted, then another meeting of finance ministers will take place tomorrow. On the face of it, Greece appears to have gained little from the negotiations, with some superficial renaming of the troika and the banning of some other words. It has some flexibility on budget targets and can more define itself where savings are going to come from, rather than these being imposed. But these seem to be modest in comparison to their initial stance and there are already signs of splits within Syriza in the wake of this. The euro is likely to remain on the defensive for the early part of the week until there are solid signs that this deal has been signed, sealed and delivered.
Beyond Greece, the primary focus for this week will be the testimony from Fed Chair Yellen tomorrow in front of the Senate Banking Committee in Washington. There is likely to be a strong focus on the timing of any likely increase in Fed rates this year. Whilst her predecessor was the architect of forward guidance, Yellen has struggled to guide markets to the same degree, coming unstuck nearly a year ago in being too specific and also having changed the Fed statement language last year to something seen as equally vague. It seems as they are damned if they do and damned if they don’t. The dollar has struggled this month, but after seven consecutive monthly gains, this should not be that much of a surprise and the run of data releases suggest that more downward pressure could be seen. Elsewhere, USDJPY is back above the 119.00 level, with sterling looking a little tired below the 1.54 level on cable.