Euro Down As Greek Worries Linger

The euro traded lower against its major opponents in European deals on Wednesday, as the Greek Prime Minister Antonis Samaras dissolved the Parliament to conduct early elections, that would determine Greece’s future in the Eurozone.

New elections will be conducted on January 25, some 18 months ahead of the schedule.

Samaras warned that new polls would determine whether Greece stays in Europe and the upcoming elections “are happening due to self-interest.”

Riskier assets faced pressure since Monday on concerns that a victory to rival Syriza party would roll back measures required under the IMF-EU bailout of the country, thereby further weakening the eurozone economy.

In an interview with a Germany daily, the European Central Bank’s chief economist Peter Praet said that lower oil prices could depress inflation and raise scope for additional quantitative easing.

With lower oil prices, inflation is likely to remain negative during a substantial part of 2015, he told Boersen-Zeitung. “Inflation expectations are extremely fragile,” and “we cannot simply “look through,” Praet said.

Moving away from an early high of 1.2169 against the U.S. dollar, the euro edged down to 1.2142. The next possible support for the euro-greenback pair is seen around the 1.20 zone.

The euro slipped to 0.7782 against the pound, a level not seen since September 29. Continuation of the euro’s downtrend may take it to a support around the 0.766 mark.

Housing equity withdrawal by individuals in the U.K. decreased further in the third quarter, data from the Bank of England showed.

Housing equity withdrawal, or HEW, fell to -GBP 10.87 billion in the third quarter from -GBP 10.56 billion in the second quarter.

The euro eased to 144.97 against the yen, from an early high of 145.57, and held steady thereafter. If the euro slides further, it may find support around the 144.00 level.

The single currency eased back to 1.2021 against the Swiss franc before holding steady afterwards. Further weakness may see the euro testing support around the 1.20 region.

The common currency weakened to more than a 3-week low of 1.4801 against the Australian dollar and moved sideways shortly thereafter. On the downside, the euro may find support around the 1.47 mark.

The European unit dropped to 1.4058 against the Canadian dollar, its lowest since December 8, from 1.4113 hit at Tuesday’s close. The euro is likely to find support near the 1.39 zone.

Looking ahead, U.S. pending home sales for November are due shortly.

Published: 2014-12-31 13:53:00 UTC+00

Euro Down As Greek Worries Linger