Euro gaps lower in Asia

The euro has predictably been front and centre of developments in FX markets in Asian trade, with traders reacting to the developments from the weekend.

Euro
Source: Bloomberg

It’s risk-off for markets in Asia today as the Greek situation brings sentiment to its knees. After US trade on Friday, Greek PM Alexis Tsipras announced a referendum on creditor proposals. With the referendum set for 5 July, Greece has also moved to close banks to prevent further outflows.

The euro gapped lower at the start of Asian trade and continues to be sold off against the majors with EUR/USD testing the $1.1000 mark. While EUR/USD is the pair most will be watching, I feel EUR/JPY poses the most opportunities right now.

Given the yen benefits from safe haven demand, this risk-off environment will actually support the yen. As a result, the yen has managed to gain ground in most crosses. EUR/JPY gapped from a close of around ¥138.38 on Saturday and opened below ¥135.00 today.

This was the lowest level the pair has traded in two months. The pair found support at the 50% retracement of the April-to-June rally, which took the pair to above ¥141.00. An uptrend support line has also been broken and I feel traders will be looking for any opportunities to sell the rallies.

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