Original Article by Vladimir Zernov – FX Empire
Source: https://www.fxempire.com/forecasts/article/u-s-dollar-jumps-as-traders-focus-on-political-turmoil-in-france-analysis-for-eur-usd-gbp-usd-usd-cad-usd-jpy-1553147
Title: U.S. Dollar Surges Amid French Political Unrest: Impacts on EUR/USD, GBP/USD, USD/CAD, and USD/JPY
The U.S. dollar experienced a sharp surge in the latest trading session, as political turmoil in France rattled investors and sent them seeking safe-haven assets. The current movement in currency markets suggests a resurgence of demand for the greenback, as global uncertainty intensifies. Traders are increasingly focused on France’s building political crisis following the surprising outcome of the European Parliament elections and French President Emmanuel Macron’s decision to call snap parliamentary elections.
The Euro, in particular, has suffered under the weight of this domestic unrest in one of Europe’s largest economies. Meanwhile, the British pound struggled to retain its recent gains due to investor caution, while commodity-linked currencies such as the Canadian dollar weakened on broad U.S. dollar strength. The Japanese yen, although traditionally seen as a safe-haven currency, lost ground to the dollar amid divergence in monetary policies.
Investors and traders are realigning their positions on major currency pairs in response to these developments. Let’s break down the recent price action and prospective outlook for EUR/USD, GBP/USD, USD/CAD, and USD/JPY.
Macron’s Surprise Election Call Roils the Euro
– The Euro fell against the U.S. dollar as investors assessed the implications of French President Emmanuel Macron’s surprise decision to dissolve the National Assembly and call for snap elections.
– This move followed a strong showing by the far-right National Rally party in the European Parliament elections, which unsettled European financial markets and exacerbated uncertainty about France’s political future.
– Political instability in a key member of the Eurozone is being interpreted as a warning signal, triggering risk aversion and prompting traders to move capital into safer assets, notably the U.S. dollar.
– Consequently, the EUR/USD pair dropped noticeably in recent sessions as confidence in the euro waned.
EUR/USD Technical Outlook
– EUR/USD settled near the 1.0730 level after dropping from earlier highs around 1.0900, indicating bearish sentiment.
– The pair broke below key support levels at 1.0800 and 1.0760, suggesting a deepening downtrend.
– Traders should watch for the next major support level at 1.0700. A move below this could open the door for further declines toward the 1.0650 zone.
– Resistance is now located near the 1.0760 and 1.0800 levels. A sustained break above 1.0800 would be needed for any bullish reversal to be considered.
– Momentum indicators like the RSI have entered oversold territory, which may suggest potential for a corrective bounce in the near term, although the underlying trend remains negative.
GBP/USD Drifts Lower Despite UK Political Calm
– The British pound edged lower against the dollar, aligning with the overall trend of dollar strength, despite relative political stability in the UK ahead of its own general election next month.
– Unlike France, the UK is not currently facing a domestic political crisis, which has helped limit downside pressure on the pound.
– However, economic headwinds in the UK, coupled with an upcoming Bank of England (BoE) policy decision, have kept traders cautious.
GBP/USD Technical Outlook
– GBP/USD retreated from recent highs near 1.2800 and currently trades near the 1.2700 mark.
– The failure to break and hold above key resistance levels points to faltering bullish momentum.
– Immediate support lies at 1.2660, followed by the more significant 1.2600 level. A break below these could lead to increased
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