The euro erased early gains while S&P 500 Index futures were little changed after U.S. stocks closed at a record Friday. It opened high today and then fell less than 0.46 percent to $1.09687 as of 11:00 p.m. in Sydney after independent centrist Emmanuel Macron beats far-right Le Pen for presidency.
Technically the euro opened with breaking to a key resistance of upper trendline, but later retreats to around 5-day moving average. With consistently trading in bullish market revealed by RSI(14), it has been experiencing a surge after the first round of French election that Macron was showed to win in the run-off with high possibilities.
Markets reacted with a muted response to a victory of Macron’s presidency as it meets market’s expectation that the majority of French are not willing to make themselves in a radical reform or even in possible turmoil. Investors believe that the victory for his presidency gives another stimulus to global equity markets that have had some concern about the tide of nationalism and protectionism in recent political contests, although it had in effect already been priced in. Their sentiment should continue to improve with another move to risk-on as populism is nearly dead in Europe.
After a decade of slow growth, rising unemployment, dwindling competitiveness, and more divided than ever over the response of the disruptive forces of globalization, France chose a president who plans to pull the country out of economic downside. He is promising that he will achieve this by trying to push through his reform agenda, including overhauling the labour market, simplifying the tax and pension system.
The European Central Bank currently continues to expect to hold a policy decision that remains at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.
Two key economic data, including change in Non-farm payrolls and unemployment rate which are released last week, shows a robust labour market and further economic development. These positive signs increase possibilities that consistently weak performance in U.S. dollar rallies after more than 2.8 percent decline according to U.S. dollar index.
Technically, the euro against the U.S. dollar is still trading in an upside channel, while a key resistance of upper trendline holds back its increase currently. In considering its future movement, investors should keep monitoring its moving in the next two days. If it is not breaking to the resistance in the next two days, retreatment is highly likely to occur and investors may look for a short position. Moreover the downturn RSI shows potential decline after resistance testing.
Chart 1: EURUSD Daily
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