Euro Gains as Debate Eases French Risks; Pound Jumps After CPI

  • Shared currency rises to strongest level in more than a month
  • Sterling reaches three-week high as inflation beats estimates

Macron Leads the Pack Following First French Debate

The euro rose to the strongest level in more than a month versus the dollar after two polls showed Emmanuel Macron was the most convincing in last night’s French presidential debate.

The shared currency strengthened against most of its Group-of-10 peers as concerns over euro-area political risks continue to abate. Macro interest grew stronger for euro-longs while some leveraged accounts unwound their shorts, according to Europe-based traders who asked not to be identified as they aren’t authorized to speak publicly. The traders noted that unwinding of euro-shorts in the options market and some outright demand for upside exposure on tenors up to two months have also supported the currency.

The euro climbed 0.5 percent to $1.0795, after earlier touching $1.0804. It reached a one-week high above 1.0750 against the Swiss franc as bearish bets in the front end hit their lowest level on a closing basis in five months. A bullish technical signal suggests the pair may overtake the 1.08 handle a second time this year.

The pound was Tuesday’s best performer versus the dollar after a report showed U.K. inflation beat estimates to rise above the Bank of England’s target for the first time in more than three years. Sterling climbed to $1.2472, its highest level since Feb. 27, as it filled offers above $1.2400 and stops were triggered near $1.2450. Traders noted fading interest at $1.2470-$1.2480 while stops entries lie above the figure.

  • BBDXY drops 0.3%, lower for a fifth day, as traders show little interest to abandon the latest bearish trend. The index, standing now at 1222.55, could test its 233-DMA, currently at 1212.28, for the first time since the U.S. elections
  • USD/JPY is little changed at 112.60 as it rebounds from its lowest level in three weeks at 112.27; Japanese names faded the dip, traders in Asia and Europe said
  • USD/SEK slipped by as much as 0.4% to trade at the weakest level since Feb. 6 at 8.7907; support comes in at 8.6970, the low on Feb. 2
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