Euro Hits Six-Month’s High On Emanuel Macron Victory

-
0
Euro Hits Six-Month’s High On Emanuel Macron Victory

The Euro (EURUSD) hit a six month high in early Asia trading session before retreating on Emmanuel Macron’s winning the French election. A 65% win for Macron against his opponent Marine Le Pen helped push the Euro to highs of $1.10 against the dollar, its highest level since the U.S election in November.

Euro One Year High

The Euro also jumped to a one-year high of 124.58 against the Yen (JPYUSD) and a five-month high of 1.08865 against the Swiss franc. Last week the Euro had hit a six-week high against the dollar as traders reacted to optimism that Macron would win the French election.

The currency has since retreated to season lows of $1.0960 in what many analysts believe is a result of investors taking profits. A win by Macron is seen as favorable for the Euro given that his rival had threatened to pull France out of the Eurozone, something that had spooked the market.

“The market already priced in the victory of Macron. We saw some additional rise of the euro this morning, but considering the difficulty for Macron’s party to get a majority in the national assembly election, he may not bring higher growth,” said Mizuho Securities chief currency strategist Masafumi Yamamoto.

While the rally to highs of $1.10 is big news for traders long on the Euro, the analyst does not believe the Euro has what it takes to move higher in the market. The lack of new positive developments especially with the pricing of Macron’s victory last week according to the analyst could limit the currency’s upside scope.

Dollar Weakness

The dollar (CURRENCY:USD), on the other hand, appears to be losing its upward momentum, net long positions for the week ending May 2 having shrunk to their lowest level since early October. Weakness in the dollar comes in the wake of the employment data showing that the economy added 211,000 jobs in April. The unemployment rate also fell to 4.4%, representing a ten year low.

The Euro will face its major test against the dollar this week, on the U.S reporting inflation and retail sales. Positive results should result in the strengthening of the dollar given that the same would fuel talk of a rate hike in June. Strengthening of the dollar, on the other hand, could push the Euro lower in the market.