EUR/USD: bulls fragile at 1.0720 as dollar gains traction

Currently, EUR/USD is trading at 1.0721, up 0.09% on the day, having posted a daily high at 1.0778 and low at 1.0709.

EUR/USD hit the skids earlier and is starting to consolidate at the 1.0720 level after the supply from aforementioned highs and double top. The dollar has bounced on the back of the idea of tax cuts with Mnuchin talking on Bloomberg. US yields rallied as did stocks when he said thath tax reform is going to happen despite recent delays in Trump's policies coming to fruition. Meanwhile, the market is getting set for the first round of the French presidential elections this weekend. There are plenty of risks heading into this event depending on how the population vote. 

French elections

It is a four horse race with Emmanuel Macron (Centralist) leading in the polls for both R1 and R2, Marine Le Pen (Front National & Far Right) closing in on Macron in the polls, Jean-Luc Melenchon (Far left) coming through,  Francois Fillon (Conservative, Les Républicons) the status quo candidate and with the Benoît Hamon (Socialist) and one of the most established and largest parties joint last so far. The key to the event in terms of the currency markets is whether there will be a shock. If not and the candidates expected to come through as leaders, the euro could find a soft landing as a result. 

How to trade France elections with Joseph Trevisani, Martin Armstrong, and Ashraf Laidi

EUR/USD levels

EUR/USD’s near term outlook is corrective, according to analysts at Commerzbank. "The Euro is in an upside corrective rebound very near term and we are very near to our stop level," they explained, "the rebound is gaining traction and will need to drop back below 1.0675 to alleviate immediate upside corrective pressure." To the downside,e the analysts explained that failure at nearby Fibonacci support at 1.0555 should be enough to trigger weakness to the 1.0494 the March low then 1.0352/40 the January low. "Our bias stays negative."