Euro rises despite France’s vote for the right

The euro has started the week with strong gains. EUR/USD is trading at 1.0756 in the European session, up 0.41% on the day at the time of writing. The euro is at its highest level since June 14.

Macron takes a drubbing in round one

France went to the polls on Sunday, with voter turnout at a four-decade high. The vote was a stinging rebuke for French President Emmanuel Macron, whose Ensemble alliance came in a distant third in the three-way race. The big winner was the far-right, as Marie Le Pen’s National Rally (RN) party won 33% of the vote and will likely be the largest party in the next parliament.

If the RN doesn’t win a majority, that could set the stage for a hung parliament and political uncertainty, which would not bode well for the French financial markets and the euro. Interestingly, the French markets and the euro are in positive territory on Monday, as investors appear relieved that the RN might miss out on a majority in parliament. The relief on investors’ faces today could be quickly erased, however, if the NR has a strong showing in the second round of voting, which takes place on July 7.

Market focus will shift from France and focus on German inflation, which will be released later today. German CPI is expected to dip to 2.3% y/y in June, compared to 2.4% in May. Monthly, the market estimate stands at 0.2%, following 0.1% gain in May. Eurozone inflation follows on Tuesday with an estimate of 2.8% y/y in June, compared to 2.9% a month earlier.

EUR/USD Technical

  • EUR/USD is testing resistance at 1.0752. Above, there is resistance at 1.0790
  • 1.0709 and 1.0671 are the next support lines

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.