The fears of a Greek exit from the Eurozone, remerged over the weekend for the first time since its height in mid-2012. In early Asian trading, EURUSD gapped lower on the open trading to a 9 year low of 1.1870 (Straticator DMA) on the offer.
Greece has implemented a number of austerity measures since the financial crisis, in an attempt to appease the ECB and the IMF. The economy teetered on the brink of collapse, and was saved by an IMF bailout. The country has begun to recover, with unemployment levels falling in the last quarter.
The fears of a Grexit are due to the political turmoil in Greece, as the anti-austerity left wing, Syriza Party could take control of government in the Greek general election on 25 January. The concern has weighed on the Euro, as the anti-austerity party may attempt to leave the single currency, which could start a domino effect.
Greece leaving the Eurozone could be a positive in the long term, as it would isolate the indebted nation from the single monetary union. However the fears of Greek exit and instability from other members is weighing on investors’ minds.
At time of writing EURUSD is trading 1.19058 having recovered from the initial weakening in early Asian trading, but is now trending back towards the 1.18 handle.
Mentions of "grexit" in news stories pic.twitter.com/6JKP9Rjx1M— Joseph Weisenthal (@TheStalwart) January 5, 2015