The pair opened with a gap higher to start the week, following the first round of French elections over the weekend. Le Pen's far-right faction won out, as expected, on course for a relative majority at least. That said, there remains much uncertainty surrounding the final outcome.
Even if the National Rally party gains a strong alliance to control parliament, what would that mean for fiscal plans? Le Pen has pledged to increase spending and that will mean setting France up for fiscal concerns at a time when they are already under fire from the EU on the matter. So, I would say that is still a reason to step with trepidation.
While the euro did make some headway against the likes of the franc and pound, it has struggled against the dollar. After some back and forth moves yesterday, EUR/USD ended higher by just 0.3% to 1.0740 and is lightly changed today.
The greenback itself showed much resilience after a weaker US ISM manufacturing PMI reading here. That is perhaps a tell on market positioning and the flows in play surrounding the dollar currently.
In any case, EUR/USD is still one that might struggle for any upside traction even on its own.
The confluence of the 100 and 200-day moving averages at 1.0791-92 and offers layered at 1.0800 look set to keep a lid on price action this week. Adding to that, there are also large option expiries layered throughout 1.0700 and 1.0800 as outlined here that are set to lock price movements until we get to the US non-farm payrolls on Friday at least.
