EURAUD has been rebounding from the key support and fundamental factors could be encouraging buyers
The ‘Le Pen’ Trade – EURJPY
Presidential elections in France are the most important political event in the second quarter, not only in Europe but for global financial markets in general. There are two rounds and three candidates but one name is especially important – Marine Le Pen. Le Pen, a leader of anti-EU and anti-immigration National Front, promised a referendum on the EU membership within the first six months of her presidency. Such a move would be another blow for an already troubled Union and a Frexit could undermine the project altogether, making Le Pen win an existential risk for the euro.
Markets were increasingly afraid of Le Pen victory in February when her support seemed to be on the rise at the expense of a scandal-hit Francois Fillon. However, a surge in popularity of socialist-backed Emmanuel Macron seems to have decreased Le Pen’s chances. Having said that, polls were unable to properly identify the support trend in the two major votes last year – Brexit and US presidential elections still fresh in traders’ minds, so a reaction to an unexpected result could be very strong. Current polls have been giving an edge to Emmanuel Macron but Marine Le Pen’s position ahead of the first round is still strong and a victory cannot be completely dismissed at this stage. The first round of French presidential elections will be held on 23 April and the decisive second round on 7 May.
Bearing in mind the above, in the case of a Le Pen win, traders could consider taking a short position on EURJPY. The euro could be naturally under pressure and the yen could gain as risk aversion would most likely increase. Note that the intraday move downwards on the pair after the Brexit vote was around 1250 pips.
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Forex and CFDs are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone, so please ensure you fully understand all of the risks.
Forex and CFDs are leveraged products and can result in losses that exceed your deposits. Please ensure you fully understand all of the risks.
Losses can exceed deposits