* Euro touches fresh three-month lows vs USD after elections
* Draghi speech to take centre stage in quiet start to week
* U.S. and UK markets shut for public holidays
By Patrick Graham
LONDON, May 26 The euro recovered early losses
on Monday after election results handed a significant share of
the EU parliament to Eurosceptics but failed to deliver the
serious domestic blow to some European governments feared by
With London and U.S. markets closed for holidays, volumes
were as low as 80 percent of daily averages, often an
environment which can make for volatile moves in pricing.
The euro blipped higher soon at the start of European
trading, but was still up just 0.03 percent at 1.3637. The
dollar, strong in recent days, traded at 80.443 just off a
7-week high against a trade-weighted basket of currencies.
There was little immediate reaction to comments by European
Central Bank President Mario Draghi ahead of a meeting next week
expected to take steps to ease monetary policy further and boost
"There does look like a bit of a risk on mood today and you
could ascribe the euro's moves to that," said a trader with one
"But it is only 20 pips and the euro has been heading lower
for quite some time. It may well just be some people have taken
the chance to take some profit."
The elections saw critics of the European Union more than
double their seats in a protest vote against austerity and
unemployment, but Italian bond prices rose as Prime Minister
Matteo Renzi looked set to outstrip the country's
anti-establishment 5-Star Movement.
Greek 10-year yields were 34 basis points lower at 6.19
percent after the anti-austerity Syriza movement
of Alexis Tsipras won the vote but failed to deliver a knockout
blow to the government of Prime Minister Antonis Samaras.
Elsewhere there were stunning victories for nationalist
parties in Britain and France.
"Of course the French government will try and avoid any
painful reforms even more so than before now. And the fact that
the Greek government has no backing amongst the population was
confirmed impressively by the election result," said Ulrich
Leuchtmann, head of global FX research with Commerzbank in
"However, in the end the reasons behind euro purchases are
unlikely to have been hopes for reform in France or the
political stability in Greece. As a result the outcome of the
election is not an event that should affect the FX market."
The euro has fallen more than 2 percent against the dollar
since May 5 against a backdrop of rising expectations that the
ECB will further ease returns for holding the common currency
Data from the Commodity Futures Trading Commission published
on Friday for the week ended May 20 showed speculators raised
their net short positions in the euro to 9,220 contracts from
2,175 contracts the previous week.
Against the yen, the dollar was last roughly flat at
(Editing by Alister Doyle)