Relieved investors helped to give the common currency a boost which briefly struck a 1-month peak against the greenback following the election outcome in Greece which supports the Euro. The pro-bailout political parties managed to win a slim majority in the Greek Parliament, which for the moment allayed fears of an immediate Eurozone break-up. According to the latest results, Greece’s main pro-bailout political parties look to win at least 162 of the 300 Parliamentary seats. As reported at 1:05 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2748 before retreating to $1.2684, still about a 0.2% rise above late trading in New York on Friday.
The rally isn’t likely to be long lived, say forex strategists, as there are still numerous underlying fundamentals which need to be addressed, specifically in Spain and Italy, and unless E.U. policy makers take definitive steps which deal with the crisis that is threatening, potential gains will be capped. Furthermore, as regards Greece, the political situation there hasn’t really stabilized as there is growing doubt that a new government would be able to deliver the additional austerity measures the country needs, meaning the likelihood the country will face yet another year of recession is strong.