EUR/USD: outlook for May 8-12
EUR/USD rose to 6-month highs ahead of the final round of the French presidential election, which will take place on Sunday, May 7. The market expects that centrist Emmanuel Macron will win the run-off against far-right candidate Marine Le Pen and become France's next president. Unlike Le Pen, Macron wants France to stay in the euro area. That’s why the market has been pricing in his victory by buying EUR/USD.
Although the euro has already strengthened on these optimistic expectations, Macron’s victory will likely keep it supported or even let it continue gaining, as in this case political risks in the euro area will significantly decline and traders will refocus on the region’s rather good fundamentals. Euro area’s retail sales rose by 0.3% in March. GDP growth in Q1 turned out to be steady at 0.5%).
After the elections, there will be only the data of minor importance in the European economic calendar. Among these releases, focus on the European Union’s economic forecasts on Thursday and German preliminary GDP on Friday.
EUR/USD has managed to stay above 1.0950 after the US NFP release. There was already a good daily close above the former 2017 resistance line. A weekly close above this level will open the way up to 1.1000, 1.1088 and 1.1100. Support is at 1.0930, 1.0890 and 1.0830.
