EUR/USD: Short squeeze is underway – OCBC

Outcome of the first round of French legislative election saw no major surprises, OCBC strategists Frances Cheung and Christopher Wong note.

EUR to face renewed pressures

“Initial projections from polling companies suggest that far right Rassemblement National (RN) party was projected to get 33% and 34.2% of the vote, left wing coalition to get between 28.5% and 29.6% of the vote and Macron’s centrist alliance to get between 21.5% and 22.4% of the vote.”

“Potentially, the Euro (EUR) may face renewed pressures. Markets are on the look-out on whether Marine Le Pen’s far right party gets an absolute majority in the National Assembly, to allow it to pass legislation more easily. Potentially this scenario can be more negative for EUR than a hung parliament outcome.”

“EUR/USD was last at 1.0750 levels. Bearish momentum on daily chart shows signs of fading while RSI rose. Risks skewed to the upside. Resistance at 1.0760 (21 DMA), 1.0780 (50 DMA), 1.0810 (38.2% fibo retracement of 2024 high to low, 100 DMA). Support at 1.0710, 1.0660/ 70 levels (recent low).”