The euro saw a relief rally last week, after Emmanuel Macron’s victory against anti-euro nationalist Marine Le Pen in the first round of France’s presidential elections. The runoff vote is on May 7.
Macron and Le Pen will square off in a televised debate on Wednesday, ahead of Sunday’s runoff vote.
Opinion polls still show Macron, a centrist candidate, holding a strong lead of 20 points over Le Pen with just four days to go to the final vote, in what is widely seen as France’s most important election in decades.
The euro will probably head higher, especially against the yen, if Macron win’s Sunday’s vote, said Stephen Innes, senior trader for FX broker OANDA in Singapore.
“Guys just want to see the final outcome and I think they are going to go into euro and I think primarily euro/yen… that’s going to be their favorite trade,” Innes said.
Under that scenario, the dollar is likely to be supported against the yen as risk sentiment improves, Innes said.
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