President Macron has won the second round of the French election. However, this result provides only a brief respite for the euro, economists at MUFG Bank report.

Downside risks to growth in Europe from ongoing conflict in Ukraine to continue

“The result is supportive for further EU integration going forward and will keep alive speculation over further joint funded fiscal stimulus to help dampen the negative fallout for European economies from the Ukraine conflict.”

“President Macron will likely be emboldened to keep pushing for a stronger response to Russia’s invasion of Ukraine. Imposing tougher measures including restricting the supply of Russia’s energy imports into the EU is still one of the main downside risks facing European economies in the coming months.” 

“For the EUR, the favourable French election result is clearly not sufficient on its own to turn the current bearish trend.”