2014.05.2603:29:06UTC+00Euro declines under protest pressure of parliament elections

Yet another factor threatens to contribute to the continuation of the euro’s rough going these past few months as anti-establishment parties score victories in the latest European Parliament elections.

This added pressure is no help to the value of the euro which is currently in the middle of a 4 day slump against the US dollar that has led to its lowest exchange rate in 3 months of $1.3615 as of last weekend. It has lost 1.7 percent of its value so far this month. Meanwhile, against the yen, the euro is at 138.76 showing a descent of 0.2 percent.

The biggest pressure could be felt in France where the far right National Front party has triumphed in what the French Prime Minister Manuel Valls calls a political “earthquake” for Europe. The victory gives credibility to the party’s anti-euro sentiments as they respond to the lacking growth of the economy over the last 2 years. The party received 25% of the total votes, quadrupling the support it received during the last vote in 2009.

Similar trends have spread to other members of the union, as other protest parties reacting to debt and unemployment problems such as the leftist Syriza in Greece and Alternative for Germany are gaining enough support to potentially throw a wrench into the plans of the 18 countries sharing the currency.

The euro’s recent notable decline could originally be traced to comments made on May 8th by European Central Bank President Mario Draghi that suggested stimulus will be adopted in the ECB’s next meeting on June 5. Before that, the euro enjoyed its greatest value in 2 and a half years of $1.3993. In light of recent developments, investors are awaiting any development from the ECB after their discussion.

In the meantime, current investor views have become more pessimistic as large speculators as well as managers of hedge-funds see the euro continuing to fall against the dollar. Numbers from the Commodity Futures Trading Commission show that net shorts, or the difference between the amount of bets placed on a currency’s decline versus its gain, significantly increased to 9,220 on May 20th from just 2,175 the week before.