The Euro (EUR) dipped in London morning yesterday as the release of CPI estimate shows inflation slows. But losses were more than retraced into gains following the US Dollar (USD) pullback (on Powell’s comments), OCBC strategists Frances Cheung and Christopher Wong note.

Second round runoff may spur volatile price action

“French media reported that between 214 and 218 third-places contenders had pulled out of the race in their constituencies. This means Marine Le Pen’s party needs 289 seats to win an absolute majority in the National Assembly. She says that she will try to open talks with individual MPs to form a government if she can secure around 270 deputies.

“We should expect to see EUR volatility returning closer to second round runoff this Sunday (7 Jul). Results should be in by the time Asia opens on Mon (8 Jul). A hung parliament would be a lesser evil for EUR than a right-wing outcome.”

“EUR/USD was last at 1.0808 levels. Bearish momentum on daily chart faded though rise in RSI slowed. 2-way trades still likely. Resistance at 1.0810 (38.2% fibo retracement of 2024 high to low, 100 DMA). Support at 1.0710, 1.0660/ 70 levels (recent low).”