The people have voted. The political balance of power in Europe is changing. European elections results show that Hollande has beaten Sarkozy by four-points and the two main parties backing the austerity measures in Greece look very much to be on the ropes. There are doubts on whether the New Democracy and Pasok parties can form a coalition to implement spending cuts to ensure the flow of bailout funds. Currently, “there is no political consensus for the kind of reforms that Greece must implement if it wants to remain in the euro zone.â€ The markets tomorrow will naturally be looking towards the Franco/German axis for guidance. Germany will surely be urging Hollande to soften his anti-austerity drive. Without it, Capital markets will be out in full force preventing the EUR from finding much traction.
Below you will find the OANDA open order and position graphs just before the Asian Markets begin trading on Sunday May 6. With London trading closed Monday due to the May day holiday, investors can expects some liquidity issues and vacuum price movements. Technically and fundamentally, through key psychological support at 1.3 opens up an initial negative move for the EUR towards 1.285.