EUR/USD rallies 150 pips on French elections R1 results, Le Pen / Macron expected outcome

EUR/USD is Up 150 pips at the start of trading (1.0916 seen on screens) and at the time of writing in volatile thin trade on the back of R1 French elections.

Le Pen was receiving 25.1% of the vote vrs Macron with 21.3% according to the latest French interior ministry count.  Interior ministry says 9.2m votes were counted as follows:

• Le Pen 25.1%
• Macron 21.3%
• Fillon 19.7
• Melenchon 17.9

While markets are thin, volatility is on the cards in Asia and the opening price of 1.0880 (150 pips higher) in the euro could be the market's pricing in a Macron victory in the second round and/ or a relief that the expected winners came through on the day. However, whatever upside there is the euro could be short-lived considering the risks to the EU on a Le Pen victory.

"While a market-friendly result of the French election may lift the euro in a knee-jerk reaction, we suspect the gains will be limited because this is the result that was anticipated, and ahead of the ECB meeting where Draghi is likely to push against ideas that a tapering or a rate hike is warranted," argued analysts at Brown Brothers Harriman, adding,  "it may take a break of the $1.0570-$1.0600 to signal that a top is in place."

EUR/USD levels

On the downside analysts at Commerzbank suggested that we will need to drop back below 1.0675 to alleviate immediate upside corrective pressure. "Failure at nearby Fibonacci support at 1.0555 should be enough to trigger weakness to the 1.0494 the March low then 1.0352/40 the January low. Our bias stays negative."

40% of the French vote to leave the EU