Forex News Review – Euro under pressure amid deadlock to form government in Greece

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Euro traded below the key psychological $1.30 level all session as Greece’s struggle to form a new government enter a fourth day with coalition talks deadlocked, raising the possibility that another election will have to be held soon. EURUSD touched a fresh 3-1/2 low of 1.2910 in early New York trading before cutting  losses and bouncing to 1.2969. Euro was buoyed after news that the next bailout installment will be paid to Greece on Thursday, totalling 4.2 billion euros.  The single currency remains vulnerable as eyes are now on the next Greek political party leader in line to try and form a coalition government after the Left Coalition party, Syriza, failed today.

 

 

GBPUSD ended the day flat, making back losses from an earlier dip to 1.6065, moving back above 1.6130. Little is expected to change in sterling ahead of the Bank of England policy meeting on Thursday, and investors are waiting to see if the MPC will announce any new stimulus measures.  So far the speculation is that the central bank is going to hold off on more QE. If so, this would be positive for the pound.

 

 

Yen remained strong due to safe haven flows amid risk aversion due to the turmoil in Europe.  EURJPY extended lower  to hit a 2-1/2 month low of  102.74. USDJPY struggled to hold above 79.50.

 

AUDUSD tumbled to 1.0020, the lowest level since December 20 before steadying. In addition to risk aversion, the aussie was hit hard after Australian Prime Minister Gillard said that returning the budget to a surplus gives the RBA room to move on interest rates, raising speculation of another rate cut.