The EUR/USD exchange rate fell to the lowest level since spring 2017 in the last week of September. As a result, the trend which started at the beginning of 2018 has continued and the exchange rate exceeded the level of 1.1000 and approached the price gap that was created during the elections in France.
It was a memorable day for the financial markets, especially for the euro, when investors were waiting for the results of the first round of presidential elections in France, which took place on April 23, 2017. At that time, there were fears that Marine Le Pen would win the majority of votes and would finally win with Emmanuel Macron. The fear on the market was so huge that investors insured against the euro depreciation above average, thus raising expectations for volatility.
When everything became clear that Emmanuel Macron gained over 24 percent votes, and Marine Le Pen just over 21 percent, the euro jumped and we saw a gap in the market opening of almost 200 pips. In fact, later the EUR/USD exchange rate just climbed higher and higher. Now the EUR/USD are returning to this place, to the gap from the first round of elections in France, which for some market participants may be a target for a downward trend.
EUR/USD weekly chart. Source: Conotoxia trading platform.
Looking at the chart, the 1.00720-1.0840 price range may be a significant support, as the price gap in April 2017 was set in this range. It is so significant that it may attract the attention of more market participants - especially long-term investors.
The performance of euro this week cannot be considered successful due to, for example, weak PMI data from the beginning of the week, which only confirmed the weakness of the European economy and an even deeper recession in the manufacturing sector and the downturn in the service sector. It seems that the lasting improvement of data from the euro area indicating that the bottom is behind us could support the single currency, and this may coincide with the EUR/USD reaching the mentioned support zone.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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