All eyes on Athens

EUR/USD will be dominated by the Greek election today and GBP/USD is set for more sideways trading. 

Greek flag
Source: Bloomberg

Euro edges lower ahead of Greek elections

Traders will be focused on Greece today as the third attempt to elect a president will be the main driver of EUR/USD in this trading session. If the indebted nation fails to elect a president we could see a general election within weeks.

Greek prime minister Antonis Samaras is in a tight spot as the recent polls put the left wing Syriza party in the lead, and as the party would look to renegotiate the terms of the bailout it could lead to a fresh wave of EUR/USD selling.

As Stan Shamu stated, Mr Samaras is unlikely to obtain the number of seats required to shore up support for his candidate. We are not anticipating any major economic announcements from the US or the eurozone today, which will put additional attention on Greece.

EUR/USD has been in a downward trend since May, and the decline has accelerated this month as speculation of QE in 2015 has ramped up and political uncertainty in Greece is back on the agenda. The $1.21 level is in the crosshairs and resistance will likely be found at the 200-hour moving average at $1.2204. 

Sterling stands still

We are expecting low trading volumes and volatility in GBP/USD today as neither country is releasing any economic indicators. Looking beyond today we are unlikely to see any real movement in the currency pair until 2015. GBP/USD has been trading within the $1.5560-$1.5580 range for the previous few sessions and that is unlikely to change today.

GBP/USD has been sliding since July but the selloff in sterling has cooled recently as the Federal Reserve is in no rush to raise rates. The US is still ahead of the UK when it comes to moving away from rock bottom interest rates, but the US central bank is concerned that the slowdown in China and uncertainty in Russia will impede global growth.

A move below the 50-hour moving average of $1.5558 would put $1.55 in sights and $1.56 is likely to act as a barrier.

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