The French election resulted in a hung parliament, a somewhat unintuitively pro-market result. The Euro (EUR) still faces downside risks during tricky coalition talks and given longer-term fiscal concerns, ING’s FX strategist Francesco Pesole notes.

EUR/USD is set for some selling this summer

“The French election resulted in a hung parliament, a somewhat unintuitively pro-market result. But given fiscal concerns, markets had a preference for Marine Le Pen’s alliance over the left-wing group to win more seats. The euro still faces downside risks during tricky coalition talks and given longer-term fiscal concerns.”

“So, if you are searching for a star performer, look elsewhere than the euro. Aside from political uncertainty, eurozone activity surveys are starting to lose steam; and an ECB that relies on its own (optimistic) inflation projections can still cut twice in 2024.”

“We believe any US-macro-driven rally close to 1.10 will offer opportunities for strategic EUR/USD selling this summer.”