EUR/USD: outlook for April 24-28

EUR/USD: outlook for April 24-28

EUR/USD was unable to rise above 1.0770 during the past week. The market’s attention is glued to the first round on French election on Sunday, April 23.

One the one hand, the environment seems to be favorable for the single currency: the euro area’s flash manufacturing PMIs came out strong, and the pro-euro centrist Emmanuel Macron is leading in the opinion polls. On the other hand, the polls show that far right candidate Marie Le Pen and hard left challenger Jean-Luc Melenchon are not far behind. As a result, the vote’s outcome still looks unpredictable and contains risks for the euro.

If Macron manages to rank first or second in Sunday’s election, investors will sigh with relief as he is seen easily winning the runoff vote on May 7. In this case, the euro will jump. Potential targets lie at 1.0830 (February high) and 1.0900 (March high). If Macron doesn’t pass to the next tour, we’ll see another test of support at 1.0600 and likely the psychological support at 1.0500. If this latter level is broken, then EUR/USD will be vulnerable for a test of 2017 low in 1.0350 area.

Among other events, which will drive the euro’s value in the coming days we should focus on the European Central Bank’s meeting on Thursday. After the previous ECB meeting on March 9 investors increased expectations for the central bank’s policy tightening in the foreseeable future. At the end of March. However, these expectations have evaporated. This time the press conference of president Mario Draghi will get special attention of Forex traders and we expect a spike in volatility. In addition, don’t miss the ECB’s flash inflation figures for April on Friday.      

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