EUR/USD hits 11-day high despite Eurosceptic parties gaining ground in EU elections

EUR/USD hits 11-day high at press time, could rise further in Europe.
The rise of populist parties in the recently concluded EU elections is not necessarily an EUR-bearish development.
EUR/USD daily chart is reporting short-term bullish reversal.

Omkar Godbole FXStreet Contributor

EUR/USD is trading at 1.1214 at press time – the highest level since May 16 – despite the Eurosceptic parties gaining ground in the European Union (EU) elections, which concluded on Sunday.

Provisional results on Sunday showed the traditional center-left and center-right political parties fell short of a majority for the first time, while the Eurosceptics, Greens, Liberals including far-right parties in countries such as France and Italy made gains.

While the Far Right’s gains suggest the bloc may continue to struggle with populism in coming years, it may not turn out bad for the common currency.

As BK Asset Management’s Kathy Lien states, “Populism is going strong and it hasn't been a crushing blow for many currencies. Just take Just take a look at the US and Australia - protectionist policies helped rather than hurt the greenback while the Australian dollar surged after the surprise victory by Prime Minister Morrison

The EUR, therefore, may remain bid in Europe – more so, as the Chinese Yuan is gaining ground as of writing.

Also, technicals support a rise to 1.1232 (trendline connecting April 17 and May 13 highs). The shared currency’s close at 1.1204 on Friday validated or confirmed the bearish-to-bullish trend change signaled by Thursday’s long-tailed bullish engulfing candle.

That said, trading volumes will be thin on account of holidays in the UK and US. As a result, gains seen today may not be sustainable.

Pivot levels

1. R3 1.1262
2. R2 1.1238
3. R1 1.1223
PP 1.1198
1. S1 1.1183
2. S2 1.1159
3. S3 1.1143

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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