Euro retreats as Emmanuel Macron beats Le Pen in France
US stocks fell sharply on Friday as concerns over the Federal Reserve intensified. The Dow Jones and S&P 500 indexes had one of the worst days this year after Jerome Powell warned the bank would continue its aggressive rate hike policy. This will imply more rate hikes and even quantitative tightening. Investors are also worried about margin pressure as the earnings season continues. Data compiled by FactSet showed that 20% of all companies published. Of these companies, 79% reported a positive EPS surprise while 69% reported a positive revenue surprise. The S&P 500 forward 12-month PE ratio rose to 18.6.
The pound fell to the lowest level since 2020 on concerns over the next actions of the Bank of England. Investors believe the BOE will pause its rate hikes and adopt a more dovish tone as the economy slows. Evidenced by the fact that consumer confidence slumped to its lowest level since 2008. According to Gfk, confidence slumped minus 7 points to -38 in April as inflation concerns grew. Other data showed retail sales fell sharply in March.
The euro fell on Monday morning as investors focused on the outcome of the French election. The results between Marine Le Pen and Emmanuel Macron showed the incumbent taking a solid lead. He won 58% of the total vote even as voter turnout remained low. He also becomes the first French president to be re-elected in 20 years. Therefore, it means fearing that France is led by a far-right leader. As a result, analysts expect the status quo in Europe to continue. The key data to watch will be the latest current German assessment and business climate data. Their impact on the euro will be relatively minimal.
The Nasdaq 100 index fell sharply on concerns about rising interest rates. It fell to a low of $13,318, the lowest level since March 21. It moved down the Bollinger bands and below the 23.6% Fibonacci retracement level. It also broke below the 23.6% Fibonacci retracement level and while the Relative Strength Index (RSI) pointed down. Therefore, the index will likely continue to decline in the short term.
GBPUSD continued its bearish trend after weak economic data from the UK. The pair is trading at 1.2831, which is significantly below the key resistance at 1.300. On the four-hour chart, it moved below the descending triangle pattern. It also broke below the 25-day and 50-day moving averages, while the stochastic oscillator and momentum pointed lower. The pair will likely have a relief rally today.
The EURUSD pair remained under pressure as investors reflected on the French elections. It is trading at 1.0796, which sits between the middle and lower lines of the Bollinger Bands as the Stochastic Oscillator moved above the oversold level. The pair is also below the 25-day moving average. The pair will likely stay within this range today.