Forex Market Review – Euro gives up gains from Greek austerity vote as uncertainty returns

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EURUSD had reached as high as 1.3283 earlier in the day but soon declined to 1.3190 in the US trading session as upbeat market sentiment soon fizzled out. Euphoria after the Greek parliament voted on austerity measures helped buoy the euro in early Monday trading. Profit-taking led the pair lower and also scepticism began to return to markets towards the end of the global trading day.

The Greek parliament may have voted on the austerity bill but many hurdles are still ahead. Euro-zone finance ministers still have to sign off on the deal. They meet on Wednesday to approve the release of the 130 billion euro second bailout package. Greece needs the funds before March 20 to meet debt repayments of 14.5 billion euros or enter a disorderly default.

Also another hurdle is an agreement between Greece and private creditors on write-downs on the value of privately-held Greek debt, which is seen wiping around 100 billion euros off the debt load, is expected to follow later in the week.

Once those hurdles are passes, there are Greek general elections in April. There is uncertainty that the new government would implement the austerity measures, highly unpopular amongst the Greek people, who were rioting in Athens today.

The euro also gave up gains against the pound and the yen. EURGBP edged down to 0.8364 in New York trading after having peaked at 0.8400 earlier today. EURJPY slid to lows of 102.23 from 103.17.

Other risk sensitive currencies like sterling and the aussie had their gains capped. GBPUSD fell to 1.5767 in the late North American session from a London session high of 1.5826. AUDUSD was mostly flat by the end of the day touching lows of 1.0722 versus 1.0776 when it was lifted by rising gold, which is a major Australian export.

Against the yen, the US dollar bought 77.62 by the end of the day, little changed from the start of the US session.