The euro posted gains, reaching a five-month high against the dollar on Monday after the centrist candidate won the first round of the French presidential election, reducing the risk of an anti-establishment shock in the final round.
The euro was up 1.1 percent at $1.0844 in the Asian trading session after hitting $1.0940, its highest level since Nov. 10.
Centrist Emmanuel Macron, a pro-EU ex-banker and former economy minister, emerged as the leader of the first round of voting and qualified for the second round on May 7 along with the second-place finisher, far-right leader Marine Le Pen.
The French vote and the euro's rise come ahead of a European Central Bank policy meeting on Thursday, at which the central bank's ultra-easy stance is set to remain unchanged.
With the first round of France's election out of the way, the focus traders is once again turning to rising tension on the Korean peninsula. U.S. President Donald Trump called the leaders of Japan and China amid fears Pyongyang could conduct another nuclear test.
For Monday, the Ifo Institute is to report on German business climate, Canada is to release data on wholesale sales and Minneapolis Fed President Neel Kashkari is to speak.
The euro jumped on Monday in the Asian session as centrist candidate won the first round of the French presidential election after a runoff between centrist Emmanuel Macron and far-right leader Marine Le Pen.
EUR/USD jumped 1.33% to 1.0871 after hitting five-month highs overnight on the French election outcome with Macron expected to win the election on May 7.
In the week ahead, political developments in France ahead of the May 7 second round of the presidential polls will set the tone for the euro ahead of Thursday’s European Central Bank meeting and Friday’s euro zone inflation data.
Pivot:1.078Support:1.0781.0741.0685Resistance:1.091.09451.0975Scenario 1:long positions above 1.0780 with targets at 1.0900 & 1.0945 in extension.Scenario 2:below 1.0780 look for further downside with 1.0740 & 1.0685 as targets.Comment:even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold
Gold fell on Monday as risk concerns eased, after the French election went widely as expected, with centrist Emmanuel Macron winning the first round of the French presidential election heading for a second race against far-right leader Marine Le Pen on May 7.
Gold prices dropped 0.90% to $1,277.35% per ounce, silver eased 0.09% to $17.907 per ounce and copper gained 0.47% to $2.563 a pound.
Investors’ attention is now shifted towards Thursday’s European Central Bank policy meeting and Friday’s euro zone inflation data and preliminary estimates of first quarter growth from the UK and the U.S. on Friday.
Pivot:1272Support:127212681265Resistance:12791283.51288.5Scenario 1:long positions above 1272.00 with targets at 1279.00 & 1283.50 in extension.Scenario 2:below 1272.00 look for further downside with 1268.00 & 1265.00 as targets.Comment:the RSI has broken up its 30 level.
WTI Oil
Crude prices moved higher on Monday, posting a relief rally after the French election went widely as expected, showing centrist Emmanuel Macron in the lead and placing him in a runoff against far-right leader Marine Le Pen on May 7.
Oil traders turn their focus to the Korean peninsula as tensions rise, with President Donald Trump calling the leaders of Japan and China and letting them know that all options are on the table when it comes to dealing with North Korea.
In the week ahead, market participants will eye fresh weekly information on U.S. inventories of crude and refined products on Tuesday and Wednesday to assess the strength of demand in the world’s largest oil consumer.
Pivot:50.5Support:49.248.648.05Resistance:50.550.9551.4Scenario 1:short positions below 50.50 with targets at 49.20 & 48.60 in extension.Scenario 2:above 50.50 look for further upside with 50.95 & 51.40 as targets.Comment:the RSI is mixed to bearish.
US 500
The main U.S. indices gained on Monday, on relief that centrist Emmanuel Macron won the first round of voting in the French presidential election, reducing the prospect of an anti-establishment market shock.
Defeated Socialist candidate Benoit Hamon, Socialist Prime Minister Bernard Cazeneuve and defeated right-wing candidate Francois Fillon all urged voters to rally behind Macron in the second round.
According to Tim Riddell, an analyst at Westpac. "The rise of the euro and risk appetite rebounding is understandable and this should also see yields in Europe fall, spreads to Bunds tighten and stocks rally,".
In the week ahead, Thursday’s European Central Bank policy meeting will be in the spotlight along with corporate earnings from the U.S.
Pivot: 2350 Support: 2350 2340 2331 Resistance: 2373 2380 2390 Scenario 1: long positions above 2350.00 with targets at 2373.00 & 2380.00 in extension. Scenario 2: below 2350.00 look for further downside with 2340.00 & 2331.00 as targets. Comment: the RSI is mixed with a bullish bias.