First-round presidential election in France saw far-right candidate Le Pen fall short of incumbent Macron. Economists at Scotiabank believe that the EUR/USD pair could nosedive to test the covid low of 1.0636 if second-round polls show a narrower gap between the two candidates.

Firm opposition to Le Pen from the far-left candidates should help the EUR trade back above 1.10

“Pres Macron took an estimated 27.6% of the vote compared to about 23.4% for Le Pen. Far-left Melenchon came in a strong third place with 22% of the vote and Macron will hope that a large share of his supporters does not turn to Le Pen in two weeks’ time in an anti-establishment drive.” 

“Le Pen’s euro-skeptic message would threaten the stability of the EU at a moment when relations among the 27 members are in solid standing following a coordinated approach to the pandemic and the economic recovery, as well as a (mostly) united front against Russia for its invasion of Ukraine.”

“If second-round polls tilt significantly in Le Pen’s favour, it is safe to expect the EUR to touch its pandemic-shock low of 1.0636 in coming days or weeks, while firm opposition to Le Pen from the far-left candidates (especially Melenchon) could help turn votes toward a Macron re-election that eases anxieties in markets – and, all else equal, should help the EUR trade back above 1.10.”