EUR: Downside comes on the back of the elections – MUFG

After initially dropping by two big figures in the six trading days following the announcement of snap elections in France, EUR/USD has stabilised since around the 1.0700-level but next week could be a week of renewed volatility depending on the result of the first round of elections on Sunday, Head of Research at MUFG Derek Halpenny notes.

Potential for downside move remains

“After initially dropping by two big figures in the six trading days following the announcement of snap elections in France, EUR/USD has stabilised since around the 1.0700-level but next week could be a week of renewed volatility depending on the result of the first round of elections on Sunday.”

“We initially estimated around a 1.0% risk premium was possibly priced into EUR now and based on short-term price action against variables like spreads, this remains a reasonable estimate.”

“With the Euro (EUR) risk premium relatively modest strong RN & NPF performances will likely see EUR/USD close to the 1.0500-level.”