EURO & Financial Markets Initial Price Reaction on French Elections

Certainly its been a wide reaction in Asia as the direct effect on the single currency in Europe has been favorable towards a Pro-EU French president. This is the initial reaction from Sunday's results.

As of Asian Session 4.24.17

This resulted with a remarkable surge as the #EURO traded with an opening price gap at 1.0918 drifting lower for a corrective session move at 1.0860 which would be traded between bull and bear players as short market squeeze would be deemed to rise due to this event where an increase in market volatility already indicated. An obvious spill over on the E-mini futures market on the SP500, DOW and the NASDAQ would be expected as a positive influence on the initial lead counting into the US trading session.

These sentiments goes in the same manner with the rest of the currency majors; where we find the #USDJPY opening at 110.50 with a spill over effect on the #EURJPY Cross opening at 119.97 with a session high at 120.33. And in addition, these moves have resulted with the NK225 moving towards the 18857 levels. 

EURO & Financial Markets Initial Price Reaction

Market Behavior ...

vs. Price Action
The ability to weigh trading analysis between economic reports and technical perspective has drawn a significant mark on price behavior in between the 3 major trading sessions. The upcoming reports on the European Consumer Price index would come earlier than the FOMC minutes that would provide a signal directly effecting the USD direction. Although, as the mid-week reports follows when the US Consumer Price Index would be compared with the German GDP report which would weigh more with the direction of the EURUSD.

Ahead of the market mid-week price action has given the USDx a daily signal of a probable pause as against a breakaway gap against all odds. Nevertheless, this should not discounted on a daily pullback and a retest of the continued strength towards the end of the week's trading will take place. Either way, Wednesday through Thursday sessions would provide a clearer picture. A Tug of War again appears to be in place

USDx Price Behavior & Analysis

The US Dollar Index as a major indicator for the Forex market more often have been neglected as the primary leading indicator. There has been a few adaptation of the index in some variety as compared with the S&P and the Dow Jones Industrial Average. However, the close correlation and distribution of the other Foreign currency composing the USDx has been the standard of measure in pricing the rest of the major pairs.
USDX Weekly Chart

In this weekly USDX chart, the most recent price action has been in a trading range between the 78.08/10 support price and the 81.55 level of resistance as indicated with the broken line. The rising channel and trend line support has been in the defensive every time it falls on a daily corrective move. A clear example is the USDx retracing lower from an opening gap and ending the American Trading session lower and currently at the 79.55 basis point. For some analyst this daily movement could mean a weakness on the market's sudden reaction from the European elections that died down. However, the prices are seen or interpreted at an even par & just above the previous week's closing at 79.50 where bullishe sentiments are still intact. And inspite of the bearsih candle bar for the day on May 07, 2012 the reaction may well be for the USDx to gain enough momentum for the next leg higher.

The fundamental news from the French election was the main catalyst of the USDx rally with an opening gap at the 79.97 basis point. And is currently retracing its daily low for some technical re-alignment with the rest of the European majors at the 79.73 level. However, even without the news that sustained the rally; the technical candle configuration have shown a weekly buying divergence as prices moved sideways into a consolidation. While the relative strength and the Stochastics showed that the third consecutive swing low had enough momentum for technical traders and strategists to take a well defined trade position with barely a minimal risk factor. Futures traders cross trading the Spot forex with the Futures DXY would have made an awesome trade just from this technical indicator. For now any price above the 80.05/10 closing price would be a bullish signal for the USDX.

FX Volatility aftermath French Elections

European Majors & Crosses across the board went sharply lower after the Greek and French elections outcome which backed anti-austerity candidates against French President Sarkozy.

Concerns about the new French President and Greek PM would need a better working coalition government. Germany's statement is that they would be closely working with the new President on their stance on austerity towards building growth for the European economy as a whole. However the likely differences with Germany from the most recent resolution on the Debt crisis will continue to weigh on the market as investors have somehow foreseen that these differences may eventually weaken the single currency like the EURUSD & weigh more on the cross rate EURGBP to their lowest levels before and real deal on the new government would come out.

EURUSD DAILY - ASIAN TRADING SESSION

This has prompted the USDx to jump start the Asian trading week with a higher opening gap at 79.97; which would attempt to break the 80.05/10 1st (R1) resistance level for the USDx. With enough momentum to build up the rally from last week's move may well be the catalyst to further the USD strength to finally continue its original trend direction. The previous week's market squeeze between the Euro and the Pound will remain tight while adding the jolt the market received from the RBA would continue to be a trade war factor between European, US and Asian major market players in the Forex market.

Likewise the EURUSD and the EURGBP opened at 1.2960 & 0.8060 respectively in the Asian trading sessions as an immediate reaction to the European elections. And this was a welcome treat for short-sellers maintaining trade position until now. However, expect some volatile reaction on both directions after the opening gap which would lead to some profit taking and trade adjustments/ liquidations for long trades caught flat-footed with this fundamental news & movement in Europe.

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