The recent French legislative election’s first round results did not bring any major surprises, according to OCBC strategists Frances Cheung and Christopher Wong. Initial projections show that the far-right Rassemblement National party is expected to receive between 33% and 34.2% of the vote, the left-wing coalition between 28.5% and 29.6%, and Macron’s centrist alliance between 21.5% and 22.4%.
This outcome may lead to renewed pressures on the Euro (EUR). There is concern in the markets about the possibility of Marine Le Pen’s far-right party gaining an absolute majority in the National Assembly, which would make it easier for them to pass legislation. This scenario could have a more negative impact on the EUR compared to a hung parliament outcome.
Currently, the EUR/USD stands at 1.0750 levels. The bearish momentum on the daily chart is showing signs of fading, with the RSI rising. Risks are tilted towards the upside, with resistance levels at 1.0760 (21 DMA), 1.0780 (50 DMA), and 1.0810 (38.2% fibo retracement of 2024 high to low, 100 DMA). Support levels are at 1.0710 and 1.0660/70 levels (recent low).