Macron winning the first round rallies the Euro
EURUSD is up on the news that the far-right failed to win the first round of French elections. Macron winning the first round is clearly important for investors who want to see a continuation of the recent economic policies in France. Stock markets have been under pressure as bond yields keep ticking higher. The 10-yr US Treasury is currently yielding 2.72% a level we’ve last seen in January 2019. Measuring from the London open on Friday NZD and JPY are the weakest currencies while the dollar is in the lead. While the rally in the yields supports the dollar it’s putting pressure on risky assets including commodity currencies. This helped GBPNZD to move to my second target level resulting in yet another successful trade idea. This week traders will focus on central bank meetings and US inflation data (CPI and PPI) as well as on the French presidential elections. In today’s report, I cover GBPNZD, EURGBP and USNGAS. By reading further, you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.To get more news about
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The way I have structured my analysis is that I will post trade ideas when I see them but when now apparent trade ideas stand out at the time of writing the analysis I will provide you with analysis and key price levels on markets that are worth putting on a watchlist. As soon as something catches my eye I will update you on our Telegram channel.
I tend to include Target 1 (T1) and Target 2 (T2) levels (or ranges) so that you have an idea of how far the market would probably move if price action supports my trade ideas. The target one is a high probability target while the next target is further away and therefore there’s a greater risk that the market doesn’t reach the level. While I don’t provide investment advice my analysis helps you in your own market analysis and then you can decide how to trade the markets.
GBPNZD took a breather last week after hitting my T1 level. Now the pair has also hit my T2 level (at 1.9058) after I wrote on Friday the 1.8943 support level was holding this far and bulls were trying to push the pair higher. The uptrend is still in force above 1.9022. What we have now is a rally from the level towards the recent high at 1.9098. The appetite for risk in the markets, in general, is souring (stocks selling lower), so in the medium term, this market has not lost its upside potential. Alternatively, a break below 1.9022 would be a sign of weakness. On a decisive break below the level, GBPNZD could correct to 1.8985.
EURGBP didn’t reach the T1 level on the first attempt and fell down to the level I highlighted in the alternative scenario (here). The pair turned around from 0.8307 on Friday and has been rallying strongly ever since. Now the market is only 0.10% away from my Target 1 level at 0.8385. It looks highly likely that EURGBP will now trade to and possibly through this level. Alternative scenario: Upside momentum is lost and the market trades down to the 0.8355 – 0.8365 range where we have the 20 SMA and the rising channel low.
USNGAS rallied back to October 2021 highs on Friday and stalled there as profit-taking started to soften the bids. I have been bullish on this market since the war started and have been providing trade ideas on the long side. Now though it’s time to be careful and just take profits on existing long trades or possibly look for shorting opportunities in this market. The upside risk remains though and therefore it’s good to keep the trade sizes smaller than usual and targets close. The market has been weakish after hitting the 6.522 resistance which means we have to pay attention to the manner the market trades around the 6.290 support level. If the level is broken decisively, look for a move to 6.22 and possibly deeper. If the level (6.29) holds then we’ll probably see the market trading to levels between the 50-SMA at 6.39 and a recent minor high at 6.380.
Macro Drivers for the USD As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.
Macron winning the first round rallies the Euro
