Euro Rally Stalls

Monday morning’s rally in the euro after Emmanuel Macron’s win in the first round French presidential elections fizzled at the 62% retracement of the 1.1298 high and 1.0339 low and resulted in a retreat to the 200-day moving average at 1.0838. This still leaves the euro with a considerable gain of more than 1% against the dollar at 1.0843.

The relief rally in equities following the French elections, and corresponding drop in safe-havens was weighing on the yen which was 0.5% below Friday’s close against the dollar. USD/JPY raced to a high of 110.57 but drifted down to 109.70 as London players took profits before the close. There was also selling associated with reports of a bomb threat at the White House, but that failed to drive the dollar below the 50-hour moving average.

To recap the election results; moderate French candidate Macron took a comfortable lead over anti-EU candidate Marine Le Pen at the first round of elections. As a result, Macron is expected to win at the second round of elections May 7, making him the next president of France. France’s CAC-40 surged more than 4% to a nine-year high, taking European equity bourses higher in tandem. Germany’s DAX set a new record high.

By Stephen Holmes