The EUR/USD currency pair bounced off the trendline support at the 1.082 dollars per euro level on Tuesday, to close at 1.094 dollars per euro, after Bloomberg released its survey of 34 economists showing 71% of respondents thought Greece will be forced out of the euro region by the end of 2016. About half said they thought the 86 billion euro bailout package Prime Minister Alexis Tsipras is targeting will prove to be too small. 

The argument that the euro currency will be stronger without Greece is back in the front burner. In early April, Berkshire Hathaway chairman and CEO Warren Buffett told reporters, "If it turns out that the Greeks leave, that may not be a bad thing for the euro.”. Currency traders were unable to push the EUR/USD currency pair below the 1.082 dollars per euro support level, and might have decided to cover their short positions. 

As of July 14, there are 108,072 short positions of euro FX (CME:6E), traded on the Chicago Mercantile Exchange (CME), by asset manager/institutional and leveraged funds. This is compared to about 164,808 long positions, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) each Friday. Net short positions have increased about 8,839 contracts since last week, where euro FX contracts are traded in units of 125,000 euros.

The rise in EUR/USD short positions could be attributed to a major push by investment banks on the idea of euro-dollar parity. On Monday, Athanasios Vamvakidis, head currency strategy at Bank of America Merrill Lynch, told Bloomberg that, “The euro will fall to parity with the dollar by the end of the year … There's room for the market to join this trade.”. Mr. Vamvakidis practically said it is time to short the euro.

The currency market may have seen the ECB’s move on Wednesday as a sign that Greece’s third bailout deal could become another kicking the can down the road, when ECB increased emergency liquidity assistance (ELA) to Greek banks by another 900 million euros and pushed the total ECB exposure to Greece to over 130 billion euros. 

Big bets might also have been put on the dollar trade after Fed Chair Janet Yellen made comments during a semiannual testimony in front of the U.S. House Financial Services Committee that the Fed is going to raise the rate between September and December this year, regardless of weak June retail sales and nonfarm payrolls reports. Bond king Jeffrey Gundlach, CEO of the DoubleLine Capital with about $46 billion under management, disagreed with Ms. Yellen and said the Fed won’t raise rates in 2015. 

Technically, the EUR/USD currency pair has been moving in a bullish ascending triangle pattern since mid-May. The EUR/USD just bounced off the trendline support at the 1.082 dollars per euro level, and the near-term head resistance is 1.110 dollars per euro.

The argument that the euro could appreciate against the dollar is supported by the recent upward revisions of the eurozone GDP to 1.8% from 1.6%, and the Harmonised Indices of Consumer Prices (HICP) inflation to 1.3% from 1.2% in 2016, according to the Eurosystem staff macroeconomic projections. That means the ECB will maintain its monthly 60 billion euro QE program until September 2016 and begin exiting the program on schedule. If Greece decides the exit the eurozone, the eurozone economy should be strong enough to absorb the impact.