The Euro to US Dollar (EUR/USD) exchange rate lost around 0.3% as exit polls put anti-austerity party Syriza as the victor of the Greek election.
According to one industry expert; ‘If Syriza indeed gets more than a third of the votes, it can get a majority in the Greek parliament without needing to form a coalition government. This will likely continue pushing the Euro lower on the remote possibility of Grexit.’
The EUR/USD currency pair could also experience volatility on Monday as a result of Germany’s IFO Business Climate/Conditions indexes and the US Dallas Fed Manufacturing Activity report.
The Euro to US Dollar (EUR/USD) exchange rate is forecast to weaken further and is likely to slump to a new 11-year low next week as markets analyse the outcome of the Greek general election.
Data out of the USA and Eurozone is also expected to show the two economies diverging.
The battle for power in Greece comes to a head on Sunday when Greeks go to the polling booths and decide on the future of their economically batter nation.
With recent opinion polls showing the left-wing anti-austerity Syriza party is in the lead ahead of the vote economists are becoming increasingly jittery.
A win for Syriza will likely embolden support for other anti-austerity parties across Europe. In a show of support the leader of Spain’s Podemos party joined Syriza’s leader Alexis Tsipras at a rally held in Athens on Thursday.
The markets are also concerned that a win for Syriza could also boost support for the UK’s anti-EU UKIP Party and Italy’s Five Star Movement.
Support for Tsipras is high among a people that have suffered under austerity measures that have seen Greece stuck in recession and sent unemployment soaring above 25%.
Tspiras has urged Greeks to give SYRIZA enough votes to govern alone and pledged to be prepared for “big clashes” with Greece’s international creditors in order to revamp what he called the “barbarity” of the nation’s rescue.
More Losses Forecast for EUR/USD Exchange Rate
The fallout from the European Central Banks €1 trillion quantitative easing programme is expected to continue to weigh on the single currency next week and economists are widely forecast to shrug off all but the most important Eurozone data releases.
On Monday, the IFO will release its January reports on Business Climate, Current Conditions and Expectations. Economists are expecting to see an improvement in the data but the impacts to the Euro are likely to be muted following Sunday’s Greek general election.
The key session for the Euro will be Thursday due to the release of a large number of Eurozone related data. Retail sales data from Spain, unemployment and inflation data from Germany and sentiment data for the wider region will be the main influencers.
The US Dollar meanwhile is likely be supported by positive domestic data which will show that the two economies will continue to diverge over the coming months.
Other data releases to keep an eye on next week include Thursday’s Italian and Portuguese business confidence and consumer confidence reports as well as confidence reports out of Greece.
Friday’s Eurozone inflation data is expected to show that on an annual basis, inflation fell by -0.4% in January to drag the currency bloc deeper into deflation territory.