The euro reacted well to the first round of French elections and as the nation goes to the polls again on 7 May, investors will be on the lookout for more price action. This month we may see what many traders term ‘sell in May and go away’ where stocks are sold for the slower summer months and picked up again in October. Let’s see how the month kicks off on the financial calendar and how the EUR/USD has performed over the previous month.
May 1: U.S ISM Manufacturing data (April)
The Institute of Supply Management Manufacturing Purchasing Managers Index is forecast to show a figure of 56.5 for the month of April, slightly down from the previous month’s figure of 57.2. A higher than expected reading should be taken as a positive for the US dollar, while a lower than expected reading should be taken as US dollar negative.
May 2: German Manufacturing data (April)
German manufacturing data for the month of April is forecast to show a figure of 58.2, matching the March figure of 58.2. The German Manufacturing Purchasing Managers Index measures the activity level of purchasing managers in the German manufacturing sector. A reading above 50 indicates expansion in the sector, below 50 indicates contraction.
May 3: FED Interest rate decision & Policy statement
The Federal Open Market Committee (FOMC) members reveal to the financial markets their decision on whether to increase the benchmark U.S interest rate above the current rate of 1%. Expectations are for the Federal Reserve to remain on hold and maintain interest rates at 1%. The United States economy reported weaker than expected jobs and retail sales data since the Federal Reserve last met.
Janet Yellen will also release the policy Federal Open Market Committee policy statement, which is the main tool the voting panel uses to communicate with investors about current and future monetary policy. Market participants will look for any comments on the recent weaker than expected economic data, and any clues offered on future rate rises.
May 5: US Nonfarm payrolls job report & Unemployment rate (April)
The Nonfarm payrolls job report is released for the month of April and is expected to show that the US economy created +180,000 new jobs. The previous month showed a much lower than expected figure of just +98,000, far below the forecast of +185,000 jobs. Seasonal effects and poor weather conditions were attributed to the weaker than expected number.
The unemployment rate is expected to show a figure of 4.6% for the month of April, slightly above the March figure of 4.5%, but well below the Federal Reserves target unemployment rate of 5%.
May 7: French Election Final Round
France goes to the polls to decide who will be the new President of France. The two final candidates competing are Centralist party leader Emmanuel Macron and Far right candidate Marine Le Pen.
Emmanuel Macron is seen as the favourite to win the second and final round after a strong showing in the first round, defeating his nearest competitor Marine Le Pen by a wider than expected margin.
First round votes showed Mr. Macron had 23.9 percent of the votes, with his closest competitor Ms. Le Pen polling just 21.5 percent of the votes. It will be the first time for France that a mainstream candidate has failed to proceed to the second round of voting.
US Dollar Strength
Foreign exchange traders will also be mindful of any comments about the strength of the US dollar from President Donald Trump, or his Treasury secretary Steven Mnuchin.
Last month President Donald Trump broke with long standing Presidential tradition and commented about the value of the US dollar, noting that it was currently too strong.
His comments sent the US dollar sharply lower against a basket of currencies and sent a message to financial markets that he is worried about the recent strengthening of the U.S dollar.
EUR/USD Technical Analysis
The recent first round French election results have seen the EUR/USD trading sharply higher, the relief rally from Emmanuel Macron’s victory saw the euro make a price high of 1.0955 in March, the highest level since November 2016.
The euro is currently retracing towards the 1.1301 high that was set on US Presidential Election Day 8 November 2016.
Technically the EUR/USD remains bullish whilst above the 200 day moving average, currently situated at 1.0838.
Resistance is located at 1.10 and 1.1155, with strong support at 1.0838 and 1.0740.
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