The Euro Shrugs Off The New French President

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Macron 66.1% Le Pen 33.9%

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Emmanuel Macron is France’s new president after convincingly beating the National Front candidate Marine Le Pen in the second round run-off. After a fairly low turnout, it was the centrist candidate Macron who was victorious. However it was always going to be the market reaction that we cared about rather than the vote, and in truth, the result of this election was known after the first round of voting.

Everyone’s an expert when it comes to elections, polls and voting at the moment, and whoever you spoke to around the French election would be quick to give you a history lesson on just how the wrong the polls were when predicting Brexit and the Trump presidency. This election was very different though, this was never close. Emmanuel Macron never dipped below 60% in the polls when it came to a runoff, so those who expected a big reaction from the Euro after Sunday’s result would have been sorely disappointed.

The biggest risk of this French election came during the first round of voting, when Macron, Le Pen, Fillon and Melanchon were all within the margin of error. On April 23rd there was a very real possibility that the French people would have a choice between the communist anti-European Melanchon and the far right anti-immigration, anti-European Marine Le Pen. So when Macron was chosen along with Le Pen a EURUSD gap was quite understandable as a relief rally, but really it was at that point the risk ended and the Centrist Macron had sealed the keys to Elysee Palace.

As far as the markets go we have seen the whole election process keep EURUSD inside its equidistant upside trend, bouncing off recent lows at 1.0570 and rallying to highs just above the all important, and psychologically important 1.1000 level. The move on Sunday saw yet again a gap higher on the Euro positive result, briefly breaking above the key level on the upside, before pretty much instantly selling off towards support below the 1.0900 level.

But what does Presidente Macron mean for the wider markets and the Euro going forward? Well, one thing is for sure, it is good news for the EU and Eurozone as a whole. Emmanuel Macron the former banker and financial aid to the government is keen to cooperate in any way he can with EU officials to not only secure the future of the European Union but to make sure that Brexit is beneficial for France. Rumours are that current MD of the International Monetary Fund (IMF) is the front runner to finance minister in Macron’s new government, another step that points to France’s total cooperation with the EU and the ECB.

This total cooperation with everything Europe means that the Euro is likely to enjoy many of the first few months of the new president’s tenure, meaning a push beyond the 1.1000 level is likely after some consolidation.

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