EUR/USD analysis: Macron´s victory mostly priced-in, but further gains expected then

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0998

A stronger-than-expected US nonfarm Payroll report released on Friday failed to boost demand for the American currency, which closed the week mostly lower across the board. The US economy managed to add 211,000 new jobs in April, whilst the unemployment rate fell to 4.4% amid a decline in the participation rate to 62.9%. Wages were soft, up by 0.3% monthly basis as expected, and 2.5% year-on-year, below previous 2.7%. The figures were enough to keep the Fed in the tightening path, with odds of a June rate hike up to 90% after the report. Still, market's attention quickly shifted to the upcoming developments in Europe, as this Sunday France will go back to the polls to define whether Macron or Le Pen is becoming the new president. Polls show a strong lead of the centrist candidate, and the market rushed to price in further political relief in the EU.

The EUR/USD pair flirted with 1.1000 at the weekly close, and chances of an upward gap, although smaller than the one seen a couple of weeks ago, are limited. A surprise victory of Le Pen, on the other hand, should trigger chaos across the board, with high-yielding currencies plunging even beyond pre-French election first round levels, and safe-haven yen soaring.

From a technical point of view, the pair is poised to extend its advance after breaking through the 1.0930/50 region, where the pair has the 61.8% retracement of the post-US election slump and former yearly highs. Daily basis, technical indicators have resumed their advances after a modest downward correction and stand near overbought territory, whilst the 20 SMA accelerated its advance after surpassing the larger ones, now at the mentioned 1.0930/50 region. Shorter term, the 4 hours chart shows that the 20 SMA is also heading north in the mentioned price zone, whilst technical indicators aim higher within positive territory.

Support levels:1.0950 1.0900 1.0855

Resistance levels: 1.1045 1.1080 1.1120

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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