Euro Rises On Speculation Of Macron Win
MaiMarFX | Apr 24, 2017 08:04AM ET
The first round of the French presidential election is behind us and investors were relieved that Emmanuel Macron and Marine Le Pen advanced to the second round of voting. Market participants now speculate that pro-growth centrist Macron will become France's next president. This initial assumption has pushed the euro to a high of 1.0923.
However, nothing is out until the runoff on May 7 and traders should bear in mind that even if Macron has good chances of winning the election, a Le Pen victory involves a higher risk for the euro. If Le Pen becomes president, the euro could free-fall towards parity with the U.S. dollar. For the moment, however, the market could price in the outcome of the second round in favor of Macron, so we may see a continuation of the upward movement in the near-term.
EUR/USD
The euro gapped higher at the weekly trading open and we realized a good profit with our buy order long at 1.0680. From a technical perspective, there could still be some room for further gains. If the euro climbs again above 1.0875 we see chances of an upward extension until 1.0950 and possibly even 1.10. However, considering the fact that the market often tends to close the opening gap, we may see the euro tumbling towards 1.0750 before there could be a continuation of the uptrend. For the bias to shift from bullish to bearish, it would need a significant break below 1.06 and further 1.05.
On the economic data front, there are no top-tier reports scheduled for release until Thursday and Friday. The European Central Bank has its monetary policy meeting on Thursday but this meeting could be a nonevent for traders as there won't be any new economic projections and no alteration of policy is expected. On Friday, the focus will shift to Eurozone Inflation data and U.K. and U.S. GDP reports.
GBP/USD
The cable traded more or less sideways while it was accompanied by a slight downward tilt. Sterling bulls should still wait for an upside break above 1.2860 in order to buy the pound towards 1.30. As long as the pair remains below 1.2840 we will focus on the 1.2750-level which could act as a current support. If the pound breaks above 1.2840 we expect a support to be at 1.2785. The most interesting piece of U.K. economic data will be Friday's GDP report.
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Here are our daily signal alerts:
EUR/USD
Long at 1.0910 SL 25 TP 40
Short at 1.0760 SL 25 TP 20-30
GBP/USD
Long at 1.2860 SL 25 TP 40
Short at 1.2735 SL 25 TP 20, 40
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