EUR/USD – Euro Hits 5-Month Highs as Investors Cheer French Vote

The euro rallied on Sunday after the French presidential election, which showed Emmanuel Macron and Marine Le Pen advancing to the second round. EUR/USD has paused in the Monday session, as the pair trades quietly at 1.0870. On Sunday, the euro touched a high of 1.0934, its highest level since early November. On the release front, German Ifo Business Climate improved to 112.9, beating the forecast of 112.4 points. In the US, there are no economic releases on the schedule. On Tuesday, the US releases CB Consumer Confidence and New Home Sales.

Almost 40 million French voters went to the polls on Sunday, and for the markets, expected news was good news indeed. The first round of the presidential election featured 11 candidates, and the vote whittled the field down to just 2 candidates – centrist Emmanuel Macron and far-right Marie Le Pen. Macron garnered 24% of the vote and Le Pen 22%, which was what most polls leading up to the election predicted. The runoff vote takes place on May 7 and French voters will have a clear choice between Macron, who served as an economic minister, and Le Pen, who is running on an anti-EU platform. The markets breathed a sigh of relief, as the nightmarish scenario of a runoff between Le Pen and far-Left candidate Jean-Luc Mélenchon was averted. We can expect daily opinion polls to be market-movers, as was the case before the first round. Macron goes into next week’s vote as a heavy favorite, and two candidates in the first round have thrown their support behind Macron  – center right François Fillon and Socialist Benoit Hamon.

Safe Havens Sink Post Election

Macron Early Victory Over Populism Boosts the EUR

What’s next for Janet Yellen and Co.? The Federal Reserve has broadly hinted that it will gradually raise rates in 2017, but it’s unclear how many times Janet Yellen will press the rate trigger. Most analysts are expecting two more moves this year, but there have been calls from some Fed policymakers for three more hikes. However, soft retail sales and CPI numbers in March have made the Fed more dovish, and on Tuesday, the Atlanta and New York Federal Reserve lowered their outlook for US economic growth for the first quarter. The Fed can point to a labor market that is close to capacity as well as strong consumer confidence, but surprisingly, this has not translated into stronger consumer spending, a key driver of economic growth. Will the Fed raise rates in June? The CME Group shows the odds of a June hike have dropped to 50%, compared to 64% earlier in April.

EUR/USD Fundamentals

Monday (April 24)

  • 4:00 German Ifo Business Climate. Estimate 112.4. Actual 112.9
  • 6:00 German Buba Monthly Report
  • 11:30 US FOMC Member Neel Kashkari Speech
  • 15:15 US FOMC Member Neel Kashkari Speech

Tuesday (April 25)

  • 10:00 US CB Consumer Confidence. Estimate 123.7
  • 10:00 US New Home Sales. Estimate 590K

*All release times are EST

*Key events are in bold

EUR/USD for Monday, April 24, 2017

EUR/USD April 24 at 4:45 EST

Open: 1.0873 High: 1.0871 Low: 1.0820 Close: 1.0865

EUR/USD Technical

S1 S2 S1 R1 R2 R3
1.0506 1.0616 1.0708 1.0873 1.0985 1.1122

EUR/USD posted losses in the Asian session but recovered most of the losses. The pair is showing limited movement in European trade

  • 1.0708 has strengthened in support following strong gains by EUR/USD on Sunday
  • 1.0873 has weakened in resistance and could  be tested in the Monday session

Further levels in both directions:

  • Below: 1.0708, 1.0616 and 1.0506
  • Above: 1.0873, 1.0985 and 1.1122
  • Current range: 1.0708 to 1.0873

OANDA’s Open Positions Ratio

EUR/USD ratio has shown strong gains in short positions in the Monday session. This is consistent with sharp gains by EUR/USD, which covered long positions. Currently, short positions have a solid majority (60%), indicative of the EUR/USD reversing directions and moving higher.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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.