Pre-French Election Eurusd weekly technical outlook

First, it was Brexit, and then Trump and now it’s the French election. Or at least, it’s the current narrative unfolding in the markets so far. Get valuable insights from our Pre-French Election Eurusd weekly technical outlook, before the markets open this week.

22 April, AtoZForex The France election this Sunday is sure a big deal to the euro. This is an event that needs to be watched closely into next trading week. The outcome of which will have a short to medium term impact on the over overall direction of the euro. This is the first of two rounds with a final vote scheduled for May 7th.

The winners winning margin is what traders will be focusing on going forward. The race is coming down to 4 candidates, the independent Emmanuel Macron, the far-right Marine Le Pen, left-leaning Jean-Luc Melenchon, and the center-right Francois Fillon.

How a tight French election impacts EUR?

The race is still quite close to predicting and that’s why it’s also quite dangerous for the EUR.  However, what’s important to remember is that, a highly unlikely scenario and the only result that could immediately upend the euro. If Macron finishes in the top-two and moves to the runoff, he’s heavily favored against any of the candidates.

Fillon would also be a big favorite against Le Pen or Melenchon. On the other hand, if Macron and Le pen get the most votes and Le Pen wins, the EUR should drift lower. Although, the extent of the pressure on the euro will be determined by the margin of Le Pen’s victory. On the calendar this coming week, The ECB monetary policy announcement, the German IFO, Eurozone confidence and inflation reports are all scheduled for release.

Pre-French Election Eurusd weekly technical outlook

Pre-French election Eurusd weekly technical outlook Pre-French election Eurusd weekly technical outlook (Click to zoom)

Looking at the weekly frame of the EURUSD, bulls seems to have given the bears quite a good fight within the week. A combo of constructive engulfing candle with a hammer as a previous close all speaks just a language. As long as 1.0550 support isn’t breached, the journey to 1.1xx is unfolding.

EURUSD Daily technical outlook

Pre-French election Eurusd weekly technical outlook Pre-French election Eurusd weekly technical outlook (click to zoom)

The daily frame of the EURUSD isn’t speaking a contrary language from that of the weekly frame. Price looks quite supportive of the bull bias. The 100-Day Moving Average protected the euro from falling off the cliff all through last week. Going into the big week for the euro, 1.0630 is a level to watch closely.

A daily close below the support zone could put the EURO under big pressure. Also, while we still like to see the euro rally, we also have to be cautious. A head and shoulders pattern seems to be developing from the daily frame. However, a breach of 1.0850 will expose 1.1xx region which should have this pattern invalidated. But until then, it is what it is.

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