The European Union breathes again

The nightmare scenario of Emmanuel Macron not making it to round 2 of the French Presidential Election fortunately did not materialize.

As the polls predicted round two of the French Presidential Election on May 7 will be a straightforward shoot-out between the right wing Marine Le Pen and the Centrist Emmanuel Macron.

It is inconceivable that Le Pen can win this fight.

Le Pen’s hardcore racist far right wing anti-EU supporters number approximately 8 million and 21.5% of the vote is not inconsiderable but fortunately she is unlikely to draw more than 10% support from the 78.5% of the people of France who didn’t support her.

She will be crushed on May 7th and is unlikely to gain more than 35% of the vote.

On the face of it, this is good news for the EURO and should turn the EURO BULLISH in its aftermath but every EUR pair has gapped open.

[EUR/CHF chart]

Markets don’t like gaps and nearly always attempt to close the gap. This sets up an excellent trading opportunity. We are looking to SHORT all EUR pairs on signs that the market is attempting to close these gaps. Once closed , depending on the mood, this could present an excellent LONG opportunity, but first things first.

A word of caution though.

The fact that far-right Marine Le Pen polled 21.53% of the vote and far-left candidate Melenchon polled 19.6% should be concerning for Europhiles as this represents 40% dissatisfaction with the European Union in some way so we don’t think the EURO will fly as a result of this election and its more likely that the FX market ¬†will look for direction from other fundamental sources and this makes Thursday’s ECB Press Conference particularly relevant and interesting.

 

 

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