Euro slumps on Greece

US dollar resilience has remained a key theme with the dollar index continuing to hold its ground above 90.

Euro
Source: Bloomberg

As we head towards the end of the year, data also starts to wind down but this doesn’t seem like it will faze US dollar bulls. Another factor that continues to work well for US dollar bulls is the policy divergence between the US and its major peers. Europe will be particularly interesting in the coming weeks and uncertainty around Greece will bring the single currency to the fore. EUR/USD traded at its lowest since July 2010 after Greece failed to elect a president which will now see the country hold early elections in January. While many would have expected further losses for the euro, the result was largely expected. The difference now will come from what the polls say about a victor for the elections. Traders should consider selling bounces in EUR/USD with potential targets to July 2010 lows in the $1.2043 region.

EUR/USD
Click to enlarge

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