Two trades to watch: CAC, EUR/USD
CAC rises but is set for a weekly loss ahead of the French election. EUR/USD falls for a 7th day.
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CAC rises but is set for a weekly loss ahead of the French election
The CAC, along with its European peers, is rising today, although the French index has underperformed its peers across the week.
The CAC has fallen over 3% so far this week, compared to a 2% decline in the DAX and a 0.5% rise in the FTSE.
Weakness in the CAC could reflect rising nerves surrounding the upcoming French Presidential elections and the market suddenly waking up to the prospect of a win by far tight candidate Marine Le Pen.
Macron is still the favourite, but the gap in the polls is much closer than it was when the two met in the final round of the 2017 election.
Where next for the CAC?
The CAC extended its recovery from the March 7 low of 5760 before running into resistance just beyond the 200 sma at 6830 and reversing lower.
The price has slipped below the 50 SMA before finding support at 6450, which now acts as the immediate backstop. The RSI is neutral, suggesting consolidation.
Traders could look for a breakout. Buyers will look for a move above 6650 the 50 sma to expose the 200 sma at 6780 and retest the 6830 high to form a higher high.
Sellers could look for a move below 6450 to prompt a selloff towards 6260, the July ’21 low.
EUR/USD falls for a 7th day
EUR/USD is falling for a 7th straight day. Not even yesterday’s more hawkish ECB minutes were enough to lift the falling euro.
The euro is out of favour as investors price in the risk of a Le Pen win as she quietly closed the gap in the polls this week.
There is no high impacting Eurozone data today; ECB’s Panetta is due to speak.
The USD finds support from expectations of an increasingly hawkish Fed and after upbeat jobs data in the previous session.
Jobless claims fell to 266k, down from 171k, the lowest level in 50 years. There is no high impacting US data today.
Where next for EUR/USD?
EUR/USD rebounded lower from the 50 sma, breaking below 1.10 the key psychological level and the lower band of the multi-month falling channel.
The RSI points to further losses whilst it remains out of the oversold territory. Support can be seen at 1.08 the 2022 low ahead of 1.0730 the April 2021 low.]
Any recovery would need to rise above 1.0940 the March 28 low ahead of 1.10.
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