Investing.com - The euro soared on Monday in Asia after an expected and welcomed outcome for the elections in France that led to 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 after defeated rivals offered him support. USD/JPY rose 0.78% to 109.95, while AUD/USD gained 0.16% to 0.7555.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.05% to 99.66.
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.
Investors will also focus on preliminary estimates of first quarter growth from the UK and the U.S. on Friday.
Last week, the dollar slid against the yen and the Swiss franc late Friday as investors moved into safe haven assets ahead of the first round of voting in a tight French presidential election race.
Polls indicated that centrist Emmanuel Macron was clinging to a narrow lead ahead of the first round of voting in France's presidential election on Sunday, in a four-way race that is too close to call.
Investors are fearful over the prospect of a second round run-off between far-left candidate Jean-Luc Melenchon and Marine Le Pen, leader of the far-right National Front party, who both want to put the country’s European Union membership to a vote.
Investors were also watching events in Washington. On Thursday, U.S. Treasury Secretary Steven Mnuchin said the Trump administration will unveil a tax reform plan soon and expects it will be approved by Congress this year.
Sterling remained supported, with GBP/USD at 1.2825 late Friday despite data showing that UK retail sales posed their largest quarterly fall since the first three months of 2010 in the three months to March.
The data reinforced concerns that rising inflation is eroding consumer spending, the main driver of the UK economy.
The pound ended the week with gains of 2.3% after rallying earlier in the week when British Prime Minister Theresa May called for early elections.
Sentiment on sterling was boosted by expectations that May will win a substantial majority in the elections, securing her position ahead of talks with the European Union about the terms for Brexit.