Macro wins French debate; EUR/USD regains bid tone

The first French Presidential debate saw centrist Emmanuel Macron come out on top. Macron’s strong performance helped the common currency regain poise.

EUR/USD recovered from the low of 1.0719 to a session high of 1.0758. The spot was last seen trading around 1.0755 levels.

Focus on Franco-German yield spread

Anti-EU candidate Le Pen’s failure to gain an upper hand in the Presidential debate means the Franco-German 10-year yield spread could narrow sharply. What this means is the bid tone around the EUR could strengthen further in the European session.

The US side of the story remains weak despite hawkish comments from Fed’s Harker on Monday. The US Q4 current account deficit data due later today could be ignored by the markets unless the actual figure shows a significant deterioration in the trade balance.

EUR/USD Technical Levels

A break above the psychological level of 1.08 (inverse head and shoulder neckline) would expose 1.0829 (Feb 2 high) and 1.0873 (Dec 8 high). On the other hand, a breakdown of support at 1.0725 (previous day’s low) would open up downside towards 1.07 (zero figure), under which a major support is seen at 1.0652 (50-DMA).