The anti-austerity French presidential candid Mr. Hollande was officially elected the new president, which is considered another political issue that may add further complications to the already uncertain outlook of the euro area. The new president has clearly disclosed his tendency towards less austerity and further growth, which may be a setback to the current fiscal pact and reforms that Sarkozy and Merkel pledged to tackle the debt crisis.
On the other hand, the two main pro-bailout political parties in Greece fell short in the parliamentary elections, as Greeks gave their votes to parties that have always stood against the previous coalition, increasing the uncertainty over the country’s political will, where many considered the move as an early signal of a possible default for the country.
The political scene will continue to dominate the trade today specially with the lack of economic releases. The EUR/USD kicked off the session with a grand 70-pip bearish gap, starting the week at 1.3011 after ending Friday’s session at 1.3082.
The pair traded below the key lows at 1.3000 area, which is major technical support and psychological level, where it’s attempting to push back above the level trading now at 1.3015. Downside pressure is expected to continue, where may see attempts to fill the gap, however should find resistance at 1.3030 and 1.3080. Steady daily closing below 1.3000 is required to confirm a potential extended downside move.
The GBP/USD fell as well, however the currency is showing more robustness. The recent break below 1.6165 support pushed price to 1.6110 areas before rebounding again this morning attempting to retest the breached 1.6165. Holding below this resistance is necessary to maintain the downside bias, where failure to do so may push the pair higher one more.
The USD/JPY has traded within a narrow range today, after opening the trading session at 79.83 the pair is currently hovering around 79.77. In general the downside bias is expected to continue as markets seek haven, where that the pair is hovering just above the key technical support at 79.50.