EURUSD – Euro Opens With Huge Gap Following French Election
Aayush Jindal
Key Highlights
The Euro opened with a monster gap up towards 1.0900 against the US Dollar.
The FX market turned risk on after the first round of the French elections suggesting Macron leading as expected.
The recent release in the US, the Manufacturing PMI for April 2017 (Preliminary) posted a decline from 53.3 to 52.8.
Today in the Euro Zone, the German IFO Business Climate Index for April 2017 will be released, which is forecasted to increase from 112.3 to 112.5.
EURUSD Technical Analysis
The Euro opened with a major gap up, as the market priced in Mr. Macron beating Ms Le Pen. The EURUSD pair traded above 1.0900, and now moving lower, looking to close the gap.The pair after opening at 1.0919 started a downside move. It broke the 23.6% Fib retracement level of the last wave from the 1.0682 low to 1.0919 high. So, there is a chance of further declines, and the pair may even look to close the gap at 1.0780.On the downside, the 1.0750-20 levels are now a major support area where buyers may take a stand and prevent further losses.
US Manufacturing PMI
This past week on Friday, the US Manufacturing PMI for April 2017 (Preliminary) was released by the Markit Economics. The market was positioned for an increase from the last reading of 53.3 to 53.5 in April 2017.The result was below the forecast, as the US Manufacturing PMI posted a decline from 53.3 to 52.8 in April 2017. The US Services PMI also posted a decline from 52.8 to 52.5, whereas the market was expecting a rise to 53.0. Commenting on the Manufacturing PMI report, the Chief Business Economist at IHS Markit, Chris Williamson, stated:
The PMI data suggest the US economy lost further momentum at the start of the second quarter. The surveys are signaling a GDP growth rate of 1.1% after 1.7% in the first quarter.
Overall, the result was not encouraging, and gave an opportunity to the EURUSD pair to register a recovery before closing the week. Now, there is a chance that EURUSD may capitalize and move past 1.0850 once again in the near term.
Economic Releases to Watch Today
German IFO Business Climate Index for April 2017 – Forecast 112.5 versus 112.3 previous.
German current assessment index April 2017 - Forecast 119.2, versus 119.3 previous.
German expectations index for April 2017 – Forecast 106, versus 105.7 previous.
Canadian Wholesale Sales for Feb 2017 (MoM) – Forecast +1.5%, versus +3.3% previous.
The pair after opening at 1.0919 started a downside move. It broke the 23.6% Fib retracement level of the last wave from the 1.0682 low to 1.0919 high. So, there is a chance of further declines, and the pair may even look to close the gap at 1.0780.On the downside, the 1.0750-20 levels are now a major support area where buyers may take a stand and prevent further losses.
The result was below the forecast, as the US Manufacturing PMI posted a decline from 53.3 to 52.8 in April 2017. The US Services PMI also posted a decline from 52.8 to 52.5, whereas the market was expecting a rise to 53.0. Commenting on the Manufacturing PMI report, the Chief Business Economist at IHS Markit, Chris Williamson, stated: