Markets overall positive as Macron wins the French election on Sunday defeating Marine Le Pen, who threatened to take France out of the European Union.
The takeaway marks a continued stability in the Euro Zone and Euro currency in general. However, the Euro is still counter-acted by a strong Dollar especially given last week’s Non-Farm Payroll figures. Payrolls increased by 211K and the unemployment rate dropped to 4.4%.
For this week’s FX plays, we observe the market setups as follows.
Currently, the EURUSD pair is still ranging on the daily time-frame. We can expected to ride any uptrend movements up until the next major resistance level at the 1.114~ price level.
Meanwhile, taking a look at the shorter time-frame, EURUSD quickly filled the gap open. This signifies that we are looking a short-lived bullish sentiment. If this pair crosses below the last Friday’s close, I would still be hesitant to switch to a bearish stance. We still have to consider that this pair was in an hourly consolidation since end of April and finally broke out on May 4th. After the break-out above, the zone turned from a resistance to support already giving one successful retest.
While the gap up on EURUSD quickly filled resuming a bullish Dollar stance, I took a similar entry over on AUDUSD. This trade is kept to a very short-term play since AUDUSD is retracing off another hourly resistance, but it isn’t as strong given the choppy sell-off. The second point of concern is the relative strength index. Despite a very choppy nature and even to the point of lower lows, the RSI is marking higher and higher gains.
GBPUSD remains a monitor for now especially given this uptrend. I am looking to go long once this pair retraces further preferably to the 1.495~ price level, which sits just above the resistance turned support zone. In fact, I wouldn’t call it much of a resistance zone since it was only tested once. I marked it as a key zone to watch, nonetheless, just given that it marked a change in decision point.
Meanwhile, we observe EURJPY returning the market open gap. This is another indication that the Euro gap up is short-lived and the election results continue to mark short-term optimism.
These are currently the pairs I’m monitoring at the moment. I am expecting closer to the London session we will begin to see a better Dollar, Euro, and Yen sentiment.