EUR dips below after Syriza wins Greek elections

USD/JPY and the JPY crosses showed little direction in thin Asia trading. The action was almost entirely on the back of EUR flows, supportive for USD/JPY but no so for the crosses. USD/JPY see-sawed between 117.26-83, down initially from 117.76 to the low on EUR/JPY sales, back up to the high as EUR/JPY bounced and then steadying later around 117.59 where the 200-HMA comes in and a pivot of sorts. Japanese bids were also noted from @117.50 on the initial move down and heavy at 117.25. Bids remain to 117.00 and offers ahead of 118.00. Stops are eyed both sides of these levels. EUR/JPY fell from 131.58 to 130.16 with the anti-austerity Greek Syriza Party winning the election and likely to take the reins of government. Short-covering saw a rebound to 131.88. Conditions were extremely thin. Most now eye choppy trading between 130-132 till Europe returns. The bias remains down and stops could be large sub-130.00, a level tipped to have optionality. GBP/JPY see-sawed between 175.68-176.95, AUD/JPY 92.14-93.08 and NZD/JPY 86.86-87.59 with all also on the back-foot, the latter two on more dovish central bank expectations.

EUR/USD opened at 1.1185 after closing Friday at 1.1205. The reason for the gap lower was exit polls showing the Greece anti-austerity Syriza Party doing better than expected. Subsequent reports out of Greece indicated Syriza would win a ruling majority with 150 seats or more. EUR came under broad pressure with EUR/USD down to 1.1098 to trigger stops and take out 1.1100 option barriers. Heavy EUR/JPY sales helped fuel the move. Once stops and barriers were out of the way, EUR/USD staged a vicious reversal to 1.1202 to fill the early gap. It fell back a bit before steadying. It will be interesting to see how Europe reacts to the Syriza victory as markets appeared quite sanguine Friday (Greek stock market up 6.0%+). The trend for EUR/USD remains decidedly down and rallies will continue to be viewed as selling opportunities and option barriers at 1.1000 now in focus. Only a break above 1.1250 will ease downward pressure.

GBP/USD punched down to 1.4972 alongside EUR/USD early before returning to a 1.4988-1.5027 range. EUR/GBP saw a fresh low of 0.7406 before bouncing to 0.7510.

USD/CHF see-sawed nervously between 0.8765-0.8823 with liquidity still virtually nil. EUR/CHF likewise saw to-fro action between 0.9788-0.9870.

AUD/USD opened at 0.7904 and immediately came under pressure in sympathy with EUR/USD. The strange aspect to the move was that AUD also weakened against EUR. AUD/USD fell to 0.7850 before buyers returned and sent it back up towards its opening level to 0.7905. The Australia holiday ensured thin trading and whippy price action. Bearish AUD sentiment has intensified with the market more convinced the RBA will ease rates when they meet in February. This is especially so with the Australian economy facing similar challenges to its Canadian counterpart. The RBA also does not want AUD to become overly popular with yield seeking investors. The close below support at 0.7945 Friday targets 0.7700, a level dating back to July ‘09.

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