Election-related concerns are extending pressure on French assets, and markets are likely to play defensively. This will keep the Euro (EUR) on the back foot, says Shaun Osborne, chief FX strategist at Scotiabank.

Move above 1.0725 to push the Euro higher

“Election concerns are extending pressure on French assets, driving the OAT/Bund 10Y above recent peaks to 73bps. French bank stocks are posting double-digit percentage losses on the week. For now, however, markets are likely to play defensively which will keep the EUR on the back foot.”

“Loss of support around the 1.07 area leaves the EUR looking soft into the end of the week. Short-term patterns reflect some demand emerging around the intraday low and retracement support at 1.0675, however, and the potential formation of a bullish “hammer” signal which may give spot a lift in our session.”

“Gains through 1.0725 may allow the EUR to steady or improve a little in the short run. Otherwise, a retest of 1.06 beckons.”