One huge consequence of the SNB debacle in January has been the change in how the FX market reacts to major risk events. Banks are no longer prepared to guarantee liquidity and if something unexpected happens, the market price ‘gaps’ are becoming increasingly bigger.
The Greek debt saga is coming to a head and there will be some market-moving headlines hitting the newswires heading into and most importantly, over the weekend. There are two major levels of uncertainty, firstly whether Greece will be cut loose from the EUR and secondly, what will happen to the EUR if this occurs.
Prime brokers are reporting that professional players are maintaining positions at extremely low levels as they worry about post-event liquidity and the retail market would do well to heed this lead; don’t be running high risk positions into possible liquidity black holes!
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