Euro Soared as Tension Eased After French Election
By: Eddy Peng Apr 24, 2017
The euro climbed the most since December, by 1.19 percent to $1.08497 as of 11:00 a.m. in Sydney on April 4 as Marcon and far-right nationalist Marine Le Pen won the first round of voting. Investors swung back into a risk-taking mode on speculation that pro-growth centrist Emmanuel Macron will become France’s next president after an opinion poll for the runoff late on Sunday showed that he would win by 62 percent to 38 percent for Le Pen.
The results of the first round of voting in French president election, in which both establishment parties were eliminated for the first time, triggers a runoff on May 7 between two radically different visions of the country’s future. Le Pen, who is expecting to take France out of the euro and clamp down on immigration, won supports amid public angers over a society traumatized by Islamic and increasing refugees.
Since the fact that last year’s Brexit referendum and Donald Trump’s victory in U.S. elections, investors have been anxiously viewing the French vote as an event that could shape European politics for years to come.
Economists are now expecting ECB to put QE (quantitative easing) exit on the agenda as tension eased after French election first round. While on changes to interest rates or asset purchases are expected at Thursday’s meeting, the European Central Bank president Mario Draghi may revise forward guidance to take a faster route to monetary-policy normalization as early as June.
Although Macron is likely to be the next president, the risk still remains now and the runoff that her support rises. “A materialization of the severe downside risk of her victory cannot be excluded by the time the ECB makes its decision,” said Christopher Matthies, an economist at Sparkasse Suedholstein. “A large change of wording or any action seems therefore unlikely since it might have to be reversed.”
The U.S. dollar index rebounds after touching the 200-day moving average which is considered to be a support. In considering the daily technical movement, if the dollar index fails to break to the MA200, traders may look for some rebounds for a long position. Otherwise, it may enter a new stage of downside to test the next support of the trendline in blue.
Chart 1: USD Index
Back to the euro’s daily movement against the dollar, it is currently trading in the bullish market showed by RSI (14) which is above median level. It has already broken to the MA200 at the opening today while after that there is retreat to find support at MA200, found at 1.08360. If the euro is not breaking the MA200 again for downside, traders may look for a further rise near term to approach and test upper trendline, regarded as a key resistance.
Chart 2: EURUSD Daily
Thank you for inquiry ACY.
Your application has been received, and we will arrange an account manager within 24 hours to contact you! We wish you have pleasant trading experience!
