After an initial fall, the Euro is inching back against the dollar despite the Greek’s decision.
After the Swiss franc crash and the ECB quantitative easing plummet, now the Greek elections is here to push the euro into more volatility.
EURUSD descended to 1.109 on late Sunday but inched up to 1.125 as more vigorous trading opened in Europe.
It was anticipated by most that the Greeks would vote in the anti-austerity party of Syriza on the back of its mandate to renegotiate the payment terms of the country’s debt to Europe. After nearly five years of recession, 25% unemployment and up to 25% of households on the poverty line, the rally call of the far-left Syriza party was too good to turn down. However, the leader Alexis Tsipras still had to form a coalition with the Independent Greeks to gain full control of parliament with 162 seats out of the 300 available – both parties are against austerity.
Tsipras hailed his victory with a rousing speech, saying, "Today the Greek people wrote history... the Greek people gave a powerful mandate. Greece is changing the page."
The main mandate of Tsipras is to renegotiate the payback of the €240 billion ($269 billion) bailout that has conditions for austerity set by the ‘troika’ of the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF). Tsipras called the troika "a thing of the past" as he plans to set out a programme of poverty relief by abolishing certain taxes and renegotiating the country’s debt to free up public spending budget. If his plan does not work the dangers are that Greece will not have ECB financial support, and in July and August the tranche of Greek bonds held by the ECB are due to mature. They are valued at 7 billion euros and if not paid, Greece will possibly exit the Eurozone and other recession-ridden EU countries will look at the Greek example and possibly follow suit.
The first official appointment in the calendar between Greece and Troika is in February when ‘bailout’ inspectors expect a progress report from Greece. As Tsipras does not recognize their authority, this date could herald the future for the Hellenic state in the EU.
MT4 chart: EURUSD
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