EUR/USD drops below 1.0800, closes Macron win-led bullish open gap

EUR/USD is back in the red after bulls fail to sustain the recovery momentum.
Risk-aversion, Lagarde’s comments offset Macron win-induced opening gains.
German IFO survey eyed amid a relatively quiet start to the US GDP week.

Dhwani Mehta FXStreet

EUR/USD is resuming its downtrend towards the previous week’s low of 1.0761, wiping out all of its early gains triggered by the French Presidential election results.

In doing so, the main currency pair closed out the bullish opening gap of about 50-pips to 1.0841 highs. The main catalyst behind the latest leg lower could be attributed to Sunday’s remarks from European Central Bank (ECB) President Christine Lagarde.

Lagarde said in an interview with CBS TV, "We will be interrupting the purchases of assets in the course of the third quarter, a high probability that we do so early in the third quarter. And then we will look at interest rates and how and by how much we hike them."

Her comments poured cold water on the expectations for a July ECB rate hike, as hinted by other ECB policymakers all through the last week.

The euro also took a hit on comments from the European Commission Executive Vice President Valdis Dombrovskis, as he said that “we are working on a sixth sanctions package and one of the issues we are considering is some form of an oil embargo (on Russia).”

Additionally, risk-off flows returned in Asia amid increased concerns over the impact of the aggressive Fed’s tightening on the American corporate sector, as borrowing costs surge. The souring market mood offered extra legs to the ongoing rally in the safe-haven US dollar across its main peers.

In the opening trades, the shared currency spiked nearly 50-pips from Friday’s close versus the US dollar after projections by France’s five main pollsters put incumbent Emmanuel Macron on course to win about 58% of the vote in Sunday’s runoff compared with 42% for Marine Le Pen.

Looking ahead, the US Q1 Preliminary GDP stands out amid the Fed’s ‘blackout’ period while the ECB commentary will also remain in the spotlight. In the meantime, the German IFO survey due for release later on Monday will be closely followed alongside risk sentiment for fresh trading incentives.

EUR/USD: Technical levels to consider

EUR/USD

Overview
Today last price	1.0784
Today Daily Change	-0.0003
Today Daily Change %	-0.03
Today daily open	1.0787

Trends
Daily SMA20	1.0907
Daily SMA50	1.1032
Daily SMA100	1.1179
Daily SMA200	1.1411

Levels
Previous Daily High	1.0852
Previous Daily Low	1.0771
Previous Weekly High	1.0936
Previous Weekly Low	1.0761
Previous Monthly High	1.1233
Previous Monthly Low	1.0806
Daily Fibonacci 38.2%	1.0802
Daily Fibonacci 61.8%	1.0821
Daily Pivot Point S1	1.0754
Daily Pivot Point S2	1.0722
Daily Pivot Point S3	1.0674
Daily Pivot Point R1	1.0835
Daily Pivot Point R2	1.0884
Daily Pivot Point R3	1.0916

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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