Emmanuel Macron managed to clinch the French presidential election, eliminating the worry that far-right candidate Marine Le Pen would manage a surprise victory and that France might consequently withdraw from the European Union. Given the positive turn of events for the European consensus, investors might wonder why the euro is slipping on Monday. The short answer is that this is a "sell the news" reaction.

After weeks of relentlessly buying the euro, currency traders took the opportunity to lock in their gains — thus pushing the single currency below the 1. Although Macron's win was highly impressive he captured the presidency by a greater than 20 percent margin , from a markets perspective, the victory was already well priced in. The real buying opportunity for the single currency was two weeks ago, when the first-round results put Macron on the path to the presidency.

Unlike with Brexit and the U. The currency pair may consolidate for another day or two, but to zoom out a bit, traders should note that the Macron win has clearly lifted an existential threat from the European Union. Better yet, Macron may create some genuine economic reform in one of Europe's biggest economies. The Macron win could stimulate the moribund French economy with a combination of fiscal stimulus and much-needed market reforms.

If he is successful, he can offer a valuable alternative to the tired philosophies of far right and far left, both of which are ultimately anti-trade and anti-growth. That will be positive not only for the currency, but for global equities as well, as investors look to Europe as another possible source of growth rather than a perpetual economic invalid. Technically, the longer a gap is unfilled on the charts, the more bullish it is for the instrument.

Currency Traders Hold Back From Election Bets - WSJ

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Register Log In Profile Email Preferences PRO Sign Out. Trading Nation Videos Trader Bios Commentary. French President elect Emmanuel Macron and his wife Brigitte Trogneux celebrate on the stage at his victory rally near the Louvre in Paris, France May 7, Boris Schlossberg Managing Director of FX Strategy, BK Asset Management. Trading Nation The big bet on a big move for Chinese stocks.

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