EUR/USD and Greece: Nomura recommends caution and doesn't exclude short-term rise of the pair

In a note published last night, Nomura provides an update on the situation in Greece and its implications for the EUR/USD pair:

The EUR/USD dropped during Asia opening. From Friday's close at 1.1160, the pair in fact opened at 1.1006, shortly after marking a low at 1.0951. However, it will be most interesting to observe the market's reaction during the European opening.

This is when we can see if the situation in Greece has a contagion effect on the bond markets of peripheral European countries, and if the weakness of equity markets leads to sufficient hedging adjustments to drive the euro upwards.

Our baseline scenario is that the euro will not fall much lower than 1.10, at least pending the outcome of the referendum to be held in Greece next Sunday."