The gap higher in the EURUSD has been filled, which was a bullish move. However, I am not waiting for a break lower than this morning’s intraday lower to confirm my idea of a lower low in the EURUSD for the rest of this month.
Forex Analysis - EURUSD
At the start of this week's trading, the euro opened with a brief rally, leading to an intra-day high of 1.0954. However, since then, it has given back most of those gains, dropping back below 1.0900. Last night's euro volatility was primarily driven by the French presidential election's first-round results.
After more than 90% of the votes were counted, there was some initial relief as polls indicated President Macron won 28% of the vote to Le Pen's 23%. However, Macron's lead over Le Pen has narrowed since then. 99% of the votes have been counted at the time of writing and the Ministère De I’Intérieur shows Macron with 27.6% of the vote. Compared with the opinion polls before the first round, President Macron now has a smaller lead. With President Macron's narrow victory, fears remain that Le Pen might win the election in the second round on 24th April. To get a majority win there needs to be a shift above 50%.
The ActivTrades sentiment indicator shows that most traders on the platform trading the EURUSD are long the euro, but one thing that should be noted is that the markets do not like uncertainty. Uncertainty is being ramped up with the possibility of Macron losing his position as well as the uncertainty around sanctions, energy, and war in Ukraine. So, it is highly likely that the euro comes lower and stop this bullish cohort out of their positions.
The price action is resting on an upward sloping trend line and my base case scenario is for that line to break, get retested, and then for a continuation lower towards parity to ensue.