EUR/USD enjoys high hopes for a Macron victory and edges up even further. What’s next?
Here is their view, courtesy of eFXnews:
BTMU FX Strategy Research notes an unusual pattern in USD dynamics as of late as the 2-year UST bond yield is now up 14bps since 18th April but over the same period EUR/USD has also jumped 1.6%.
BTMU points to two factors why this has happened.
“Firstly, of course, the French 1st round election result has removed political risk premium from the market helping the euro and secondly while the 2-year yield spread points to a lower EUR/USD, the 10-year spread does not – it has barely moved,” BTMU adds.
Nonetheless, BTMU argues that the Fed bullish May statement and the move in short-term US yields do indicate is that we should not expect much EUR/USD upside if as expected Macron wins the 2nd round election on Sunday.
EUR/USD is trading circa 1.0935 as of writing.
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