Partial results from the Greek Interior Ministry showed no clear winner but big gains for the Coalition of the Radical Left at the cost of the mainstream New Democracy and Pasok parties, which had both signed on for major spending cuts to stabilize the country's finances.
In France, voters elected Francois Hollande as the country's first Socialist president since the 1980s, promising to change how the euro-zone is dealing with its debt crisis.
Currency traders reacted negatively to the developments. The single currency fell sharply to $1.2968 from $1.3083 in late New York trade Friday.
"The election outcome in Greece creates significant uncertainty ahead for the country primarily and the broader spectrum of euro-area assets," Goldman Sachs strategists said in a note to clients.
Officials from the European Union and the International Monetary Fund immediately warned that Greece must adhere strictly to its austerity program and said there is little room for any new talks on the bailout terms.
"What happens to these austerity measures now are what are weighing on the euro," said Emma Lawson, currency strategist at National Australia Bank. "We have long suspected that this period would be a difficult one for the common currency," Lawson said.
The negative tone was also felt on growth assets such as the Australian dollar, which tumbled to a fresh 2012 low of US$1.0156 from US$1.0163. Strategists said the pair remains vulnerable to any further bad news on the global outlook.
A key event for the Aussie this week is the government's annual budget due on Tuesday which is expected to promise steep spending cuts to return a budget surplus in the next fiscal year.
"The Australian dollar is likely already priced for this, and many measures are in the public domain, but any surprises on spending are likely to weigh on the Australian dollar. The upside may come if the austerity measures are less strict," Lawson said.
EUR/USD falls, operating below 1.3000
The EUR/USD pair gapped as low as 1.3012 at the opening and managed to break below the 1.3 figure to extend its slide to a 4-month low of 1.2953, fueled by Hollande victory in France and as the Greek government now faces strong opposition in parliament against the anti-austerity bloc.
“In bigger time frames, the bearish tone is also strong as indicators head south below their midlines," says Valeria Bednarik, Chief Analyst at FXstreet.com. The analyst also notes the pair holds a strong bearish tone according to the hourly chart, and indicators are seen in extreme oversold levels.
The pair has bounced from its session lows and is last quoted 0.8% lower on the day in the 1.2980 price zone, with support noted at 1.2930 and 1.2890, while resistance levels are seen at 1.3030, 1.3060 and 1.3100.
USD/JPY is currently at 79.71 just few pips above fresh 11-week lows, lowest since mid Feb, with market participants jumping on the safe Yen longs wagon, pushing the USD/JPY lower, no matter how much the BoJ may threaten on new stimulus measures or interventions ahead. Hollande's presidential elections win in France has given a nice sell-off in EUR/USD which is dragging lower the rest of the market in a risk-off move.
USD/JPY dealing with 11-week lows above 79.60
Less than 90 minutes away from Tokyo opens, after almost the whole past week being closed on holidays, US futures are printing a fresh 2-month low, with all risky assets having a beat, ES futures losing more than 1.39% from previous close last Friday.
Immediate support for USD/JPY comes at present level 79.66 as May 1 lows, followed by intervention day Oct 31 highs at 79.51 and Feb 20 lows 70.36. For the upside, closest resistance show at recent session highs/May 02 lows at 80.05 followed by April 16 lows 80.29, and Friday highs 80.3
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