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Greece is back in focus after Syriza gained a majority vote and protests broke out in Athens yet again. Anti-EU parties seem to have gained significant support across the continent and this was highlighted in the EU parliamentary elections. At the same time, the Ukraine is close to appointing Poroshenko as president. Putin has reportedly assured Europe that Russia will respect the outcome of the Ukraine elections.
There is a big meeting taking place in Portugal where we will get some commentary on the EU parliamentary results and ECB president Mario Draghi will speak at an ECB central banking forum. Jean Claude Juncker will discuss the parliamentary results at 1900 and the market will be listening out for any commentary on the shift in sentiment to anti-EU. We just also have to keep in mind that the last parliamentary elections in 2009 took place when the European crisis was rampant. Talk of negative deposit rates is also ramping up and no doubt the ECB will be feeling the pressure.
Technicals point to further weakness
With all this taking place, European bonds and the single currency will be well in focus today. The relative calm we’re currently seeing suggests a big move might be on the way. Since breaking the uptrend which was in place from July 2013 to May 2014, it’s been one-way traffic for the pair with traders reluctant to push it higher. EUR/USD has since lost the 1.37 handle and is on the verge of testing 1.36. The short-term moving averages are crossed lower and the pair is now trading below the 200-day moving average. Near-term targets are likely to be towards 1.35 ahead of 1.34.