EUR/USD is on the rise: after consolidating its most recent gains seen on Friday, the pair makes another move to the upside, reaching 1.0640.
What is behind the move? There are two main forces moving the pair, coming from both sides of the Atlantic.
French hopes
In Europe, the political focus is on the French elections. Centrist candidate Emmanuel Macron is gaining ground against his rivals, mostly due to their legal issues. In the first round, Macron gains against his rival for second place Fillon as the latter gets deeper in trouble. Following the so-called “Penelopegate”, the center-right candidate digs in but loses allies. A challenge from his peer Alain Juppé will likely be launched.
And in the second round, Macron gains more ground against extreme-right candidate Marine Le Pen. The FN candidate is in legal trouble of her own, and she already has a limited base.
USD correction
In the US, the Fed told us last week that a rate hike is coming in March. A well-coordinated chorus of Fed officials raising the bar for a hike culminated in a speech by Fed Chair Janet Yellen. Late on Friday, Yellen told us that barring any disaster, the Fed will raise rates on March 15th. Only a terrible jobs report on Friday could ruin t.
So why isn’t the dollar rising? We are probably seeing a correction after the previous gains. The greenback is losing ground also against other currencies.
In addition, the political scene in America is not the prettiest. After President Donald Trump was quite presidential in his speech in Congress, the Donald returned to his nasty tweets, trying to distract attention from his Russian ties by making baseless accusations about Obama wire-tapping his operations. This kind of talk worries markets.
More: Investors Wary Of Holding The EUR N-Term: Where To Target? – CIBC
The next line of resistance is quite close: 1.0660, a level the pair failed to breach last week. It is followed by 1.0720. Support awaits at 1.0590.
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