The first round of the French election has revealed no large surprise. However, the reaction is magnificent. The difference between the Fridays closing and Monday's opening prices is almost 200 base points. Although, after the opening the Euro began a fall, as profit taking took place until a support was found.
Services and manufacturing activity in the Euro zone rose more than expected in April, suggesting that the region's economy started the Q2 of 2017 with solid growth. HIS Markit reported on Friday that its Flash Purchasing Managers' Index for the Euro zone's manufacturing sector came in at 56.8, following March's final reading of 56.2 and surpassing analysts' expectations for 56.1. Furthermore, the Flash Services PMI came in at 56.2 in April, while markets anticipated an unchanged reading of 56.0 during the reported period. Thus, the Flash Composite PMI advanced to 56.7 from March's 56.4, hitting its highest since April 2011. Economists stated that Friday's PMI surveys provided enough evidence to say that the Euro zone economy started the Q2 with strong growth.
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EUR/USD opens above 1.09 mark
Due to the French election induced certainty in the Euro the EUR/USD currency exchange rate began the week at 1.0923, which is almost 200 base points higher than the Friday's closing price Although this is a fundamental shift, the move is still consistent with the large scale ascending channel pattern, as the upper trend line of the channel has not been reached. On Monday morning profit taking was occurring, as the rate had dropped down to the 1.0826 level. It is most likely that the rate will soon find support and stop before the future direction is revealed.
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Hourly chart
Read More: Technical AnalysisMarket sentiment mostly bearish
SWFX traders are bearish on the pair, as 56% of open positions are short. Meanwhile, 52% of set up orders are to sell the Euro.
OANDA traders are bearish, as 59.58% of trader open positions are long on Monday, compared to 51.19% previously. However, SAXO bank clients remain bearish, as 58.51% of open positions are short, compared to the 59.74% positions on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.08 in July
Traders, who were questioned on their longer-term views on EUR/USD between March 24 and April 24 expect, on average, the currency pair to trade around 1.08 in the second half of July. In general, 51% of participants believe the exchange rate will be generally above 1.08 in ninety days, and 20% (-1%) see it above 1.12. In the meantime, 7% of those surveyed reckon the pair will be at parity or below.