EUR/USD

The Euro has once again failed to take advantage of positive news after French President Emmanuel Macron was declared the winner of the French presidential elections yesterday and the European currency has just hit a new 2 year low against the US dollar as trading gets underway in the European session.

Many thought the reelection of Macron would be welcome relief for the Euro as his challenger, right wing candidate Marine le Pen had been threating all kinds of things such as dragging France out of the Eurozone amongst one of her more controversial policies.

Analysts put the Euro’s weakness down to interest rates and believe it is hard to see just how the Eurpo will make any sustainable recovery against the Greenback considering several rate hikes from the ECB are already priced into the market.

“The marked ECB-Fed divergence argues against any sustainable rebound in EUR/USD. This is despite ECB officials having sounded more hawkish after the ECB5's April meeting, simply because money markets are already pricing in three 25bp rate hikes by year-end, which is keeping the bar quite high for any hawkish surprise.” Said analysts from ING.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of the IFO business climate and current assessment conditions figures from Germany which will be followed by a monetary speech from ECB board member Fabio Panetta.

Due to a lack of economic data from the US market participants will also focus on the conflict between Ukraine and Russia for any escalations.