The euro clawed its way back to the 1.09 line on Monday but has retreated. EUR/USD fell 1.57% last week and hasn’t had a winning session in the month of April.
It’s Macron vs. Le Pen, again
The first round of the French presidential election is over, and it will be a repeat run-off (final round) between President Emmanuel Macron and Marine Le Pen of the far-right. The two candidates ran against each other in the 2017 election, which Macron easily won. This time, however, it is shaping up to be a much closer race. Macron is slightly ahead, but Le Pen has been closing the gap and there is a sizeable amount of the electorate that is unhappy with Macron’s performance. The runoff takes place in two weeks, and election polls will likely have an impact on the euro’s movement. Le Pen is a fierce euro-sceptic and if she appears to be gaining in the polls, it will be bearish for the euro.
The ECB holds a policy meeting on Thursday, and a dovish stance from the central bank won’t do any favours for the struggling euro, which is down 1.52% in April. EUR/USD dropped to 1.0836 on Friday, putting pressure on the 1.0800 line, which has held since May 2020. If 1.08 fails, the euro could take a tumble all the way to 1.06.
Germany releases the ZEW Economic Sentiment index on Tuesday. The index swooned in March, falling from +54.3 to -39.3. The magnitude of the slide was stunning, and the markets are braced for even worse, with a consensus of -48.4 for April. The driver behind the sour mood is the war in Ukraine, which together with sanctions against Russia is having a sharply negative effect on the German economy. Inflation is expected to continue to accelerate, which is adding to the pessimistic outlook. The Eurozone ZEW Economic Sentiment is projected to show similar numbers, and soft ZEW releases could spell trouble for the euro.
EUR/USD Technical
- There is resistance at 1.1008 and 1.1141
- 1.0838 is a weak support line. Below, there is support at 1.0705
