Forex Market Review – Euro trims losses but vulnerable to Greek election uncertainty

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Euro is trading lower against the dollar today compared to Friday, weighed down after the results of French and Greek elections that took place on Sunday. The elections raised concerns that austerity efforts in Europe may be derailed. In Greece, voters voted for parties that opposed austerity measures, putting at risk the Greek bailout plan. No single party won a majority.  In France, new French President Francois Hollande is said to oppose Merkel’s policies for fiscal unity in the euro zone.

 

EURUSD however proved quite resilient after falling to a 3-1/2 month low of 1.2953 in Asian trading, the pair managed to trim losses and rise to 1.3044 in the Europe session. Some positive German factory orders data helped pull up the single currency.  However, the euro remains vulnerable until Greece is able to put together a coalition government in the coming days.

 

EURGBP tracked the EURUSD in light trading due to a public holiday in the United Kingdom, moving off a 3-1/2 year low of 0.8033 to bounce to 0.8069.

 

EURJPY recovered losses to rise from a 2-1/2 month trough of 103.19 in Asia and climbed to  104.15 in Europe. USDJPY was flat during the European session trading above 79.70 after a brief dip in Asia to 79.62. Japanese Finance Minister Jun Azumi warned not to take advantage of the events in Europe and signalled he is willing to intervene in the currency markets to curb yen strength. Yen is considered a safe haven asset and usually strengthens during risk aversion.