EUR/USD has been consolidating, following the first-round of the French election, flirting with a significant psychological level at 1.0900.
The second-round of the French presidential election will be held this Sunday May 7, and EUR has strengthened as markets expect Macron to win the final vote.
During the early European session today, EUR/USD reached a high of 1.0989, last seen on November 9 of 2016.
However, EUR/USD retraced as it was nearing a significant psychological resistance level at 1.1000 (where heavy selling pressure is expected). We can also speculate that many traders have reduced exposure ahead of the election to minimise risk.
If Macron wins we can expect EUR/USD to rise and likely break the resistance level at 1.1000.
Conversely, if Le Pen wins we can expect risk-off sentiment and market concerns over the collapse of the EU which will result in a selloff in EUR/USD.
Be aware that, the result will likely cause significant volatility in the market with the possibility of a gap in Friday’s close and Monday’s open during early Asian session.
The resistance level is at 1.1000 followed by 1.1050.
The support line is at 1.0950 followed by 1.0930 and 1.0900.
Please note that the release of US labour market data (Apr), at 13:30 BST today, will likely cause volatility for USD, USD crosses and commodities.