In line with expectations, the second quarter of 2017 commenced with the European common currency bouncing off the lower boundary of the pattern. Nevertheless, the first round of French presidential election did cause a break of the upward wave, as financial markets demonstrated increased enthusiasm about the positive electoral outcome. The upside momentum was strong enough to break the given pattern and push the rate up to the 125.40 mark. Subsequently, the Euro entered in a consolidation phase, not being able to overcome this level and, therefore, remaining in relatively same range for two consecutive months. The last trading days in June saw a boost in confidence that guided the Euro up to the 128.00 area.
2017 Q3 Outlook
The Euro reaching a one-year high at 125.40 mid-April suggested that the pair had finally exhausted its upward potential. The massive surge late June proved otherwise, turning technical indicators once again. Nevertheless, this move might not be sustainable in the intermediate term, favoring Euro’s depreciation against the Yen in the upcoming weeks. It is likely that the Euro re-tests 128.00 in early July prior to depreciating against the Yen in the intermediate term. Subsequently, the pair should rebound from the upper boundary, as the 100- and 200-hour SMAs are expected to be near this level. By and large, the given breakout to the upside may restart a in August or September. Nevertheless, the German federal election in late September is expected to have similar implications as its French and British counterparts, that is, markets may respond sensitively to any political electoral developments. In addition, results expected by financial markets may set the pair for a surge to the upside.