The euro is advancing alongside European stock index futures on speculation that Marine Le Pen’s far-right party may struggle to obtain an absolute majority in the French elections.
This has eased investors’ concerns about the second-largest European economy moving towards a more radical policy shift.
The EUR/USD pair has extended gains above 1.0750 in European trading, rising by about 0.50%.
Exit polls indicated that Marine Le Pen’s Rassemblement National party secured around 34% of the votes, ahead of left and center rivals.
However, the chances of the far-right, Eurosceptic, and anti-immigrant party winning next week will depend on political agreements with its opponents.
Investors are now focusing on the upcoming runoff on Sunday, eagerly anticipating further political developments in France.
Despite Le Pen’s victory, the European markets remain steady without major fluctuations.
Following the unexpected first-round results favoring the far-right, the euro gained ground.
However, the outcome was below some expectations from polls, leading to a sigh of relief among investors.
The slight increase in French government bond futures and a decrease in German bund futures were observed post the initial voting rounds.
Tony Sycamore, a market analyst at IG, highlighted, “There is a sense of relief that the first round of the French elections did not overwhelmingly support Le Pen as indicated by the polls.” Meanwhile, Vasu Menon, Managing Director of Investment Strategy at OCBC, commented on the concerns of a potential clash between France and the EU if the far-right Rassemblement National party secures a majority, which could disrupt the European markets and the euro significantly.
In the current scenario, the euro reached a 2-week high of 1.076175 against the dollar during early Asian trading hours, pushing the US dollar index slightly lower to 105.61, reflecting the currency movements amid the French election speculations.
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