Forex Market Review – Euro at 3-1/2 year low against pound

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Euro remains under pressure due to the ongoing political uncertainty in Greece, which has limited time to form a new government after Sunday’s elections failed to result in a majority for one party. Further weighing on the single currency is the future of the bailout fund after Mr Tsipras, the leader of Greece’s Left Coalition party Syriza said on Tuesday that the country’s commitment to a European Union/International Monetary Fund rescue deal had become null and void.  Mr. Tsipras is holding talks with Greek political parties today in an attempt to form a coalition  government. Failure to do so in the coming days will increase the chances of another round of elections.

EURUSD fell to 1.2961, hovering close to the 3-1/2 month low hit on May 7, the day after the elections. There is potential for euro to go lower but at the moment there is congestions at key support as the pair is oversold.

Against the pound, euro is close to a three-and-a-half year low, with EURGBP hovering at 0.8035.

GBPUSD fell to 1.6097. Bank of England policy meeting is in focus tomorrow.

Yen is holding strong due to safe haven flows amid rising risk aversion with the turmoil in Europe.  EURJPY extended lower  to hit a 2-1/2 month low of  103.01. USDJPY struggled to hold above support at 79.70 but eventually fell to 79.42.

Against growth sensitive risk assets such as the Australian dollar and Canadian dollar, the greenback was the currency of choice, taking on a safe haven status.

AUDUSD fell to 1.0051, the lowest level this year.

The Canadian loonie also fell to a four-month low against the US dollar. USDCAD rose to 1.0050.