Forex Market Analysis: EUR/USD Steady Amid French Election

2024/06/25

CURRENCIES

EUR/USD analysis:

• EUR/USD stabilizes above 1.0700 despite political uncertainty.
• Trades below 200 SMA; lower bound at 1.0643, April low at 1.0600.
• Key events: US GDP data and PCE on Friday.

Bond spreads:

• European bond yields in focus ahead of French elections.
• French-German 10-year spread rose to ~80 basis points.
• Potential euro pressure if EU bond spreads widen significantly.

French election polls:

• Marine Le Pen’s National Rally (RN) leads with 33% in the first round, unchanged from the previous survey (Toluna Harris Interactive).
• Left-wing coalition NFP rises to 27%, Macron’s party drops to 20%.
• Projections:
  • National Rally: 215-245 seats, allies (Eric Ciotti): 15-30 seats
  • NFP: 150-180 seats
  • Macron’s party: 85-130 seats
  • Republicans: 30-50 seats
• Ifop-Fiducial poll: RN has 36% share, potentially 220-260 seats.

STOCK MARKET

Nvidia’s 13% stock rout: traders look for support levels

• Selloff Details: Nvidia’s three-day, $430 billion selloff has traders turning to technical analysis for support levels.
• Stock Correction: Nvidia has fallen 13% since briefly surpassing Microsoft as the world’s most valuable company, entering a technical correction.
• Premarket Drop: Nvidia shares dropped another 2.4% in premarket trading on Tuesday.

Technical analysis insights:

• Capitulation Signs: Abrupt reversal with signs of capitulation, per Buff Dormeier, chief technical analyst at Kingsview Partners.
• Support Levels:
  • Short-term support around $115.
  • Next significant level at $100.
  • $115 level near key Fibonacci retracement.
  • 38.2% retracement from April’s intraday low to recent high is about 2% below Monday’s close.
• Long-term Trend:
  • Ari Wald (Oppenheimer): Long-term trend strong, above 50-day moving average ($101) and 100-day moving average ($92).
  • Bruce Zaro (Granite Wealth Management): Breaching $100 could signal a need for patience amid market volatility.

Recent performance:

• Stock Surge: Nvidia soared this year due to high demand for AI chips.
• Recent High: Stock rose 43% from May 22 earnings report and stock split announcement to June 18 peak, reaching a market value of $3.34 trillion.
• Current Status: Despite the recent drop, Nvidia is up 139% this year.

Market sentiment and predictions:

• Ari Wald’s View: Major tops involve several rounds of buying and selling; Nvidia’s long-term uptrend remains intact.
• Bruce Zaro’s Caution: A drop below $100 would signal caution, especially with expected market volatility and upcoming elections.

Click here to open account and start trading.