background image background image background image

FX Update: EUR and the French election. CNH just moved for a change.

Forex 5 minutes to read
Picture of John Hardy
John Hardy

Head of FX Strategy

Summary:  The US dollar has turned lower as long US treasury yields finally beat a more determined retreat today after their recent run to just shy of 3.00% for the 10-year benchmark. Euro traders are holding their breath ahead of the French run-off election on Sunday, with an important Le Pen-Macron debate this evening. Is the single currency set to jump to start next week if Macro wins by a comfortable margin? Elsewhere, SEK is on a roll and CNH has gone bump in the night.

FX Trading focus: EUR and French Election, SEK repricing, AUD, JPY and CNH

I gave considerable coverage to the Swiss franc yesterday, which may be itching to sell-off, both on the CHF-negative rise in global yields and as the market leans for Macron to win this Sunday’s run-off with Le Pen. There is likely some further pent-up selling in store for the CHF on the actual outcome on Sunday, should Macron walk away with a comfortably strong result – if indeed this has been the source of the strong rise in SNB sight deposits in recent weeks (if not last week). But to what degree has the euro also been held back elsewhere by the French presidential election uncertainty – for example against sterling and the US dollar? It’s easy to argue that even without the election, the inferior EU yields due to the reluctant-to-tighten ECB are a sufficient drag on the single currency to keep it lower versus the more credible plans from the Fed and the BoE. We’ll know the truth next week in the wake of the election result, with a decent bid in the 1-week volatilities in EURCHF and EURUSD suggesting that the market is holding its breath to a degree ahead of the result. And we will get some further color on the situation already late today as Le Pen and Macron are set for a live debate tonight. In 2017, Le Pen’s poor showing at the debate was noted, just as this time around, she seems to have an entirely different energy in her campaigning. Certainly, if Le Pen does somehow up-end expectations and emerge with a victory after the Sunday poll, it will be a complete game changer for the EU narrative that has developed in the wake of Russia’s invasion of Ukraine. A Bloomberg article argues it would be on par with the Brexit shock, which is hard to argue against, although market volatility might prove far more muted in the near term.

Relative to recent volatility, the EURCHF pair may be the more “pure” expression of French Presidential election outcomes, but EURUSD may be in the mix as well, certainly indicating early next week whether the pair trading near 1.0800 of late is more a reflection of the pressure on Europe from punitive energy prices and the ECB dragging its heels on policy tightening relative to global peers or whether there is a EUR discount on the uncertainty of the ECB election. Short-dated implied options volatilities do indicate elevated uncertainty. There is also the May 4 FOMC meeting in the mix the week after next – but certainly the next two weeks are pivotal for this pair and option plays for expiry at least a day or two beyond the FOMC meeting are worth considering for expressing a view either way. 1.1000 suggests a weakening of the down-trend, while 1.1100+ begins to suggest a reversal.

Source: Saxo Group

Meanwhile, SEK continues to reprice to the upside. And EURSEK is breaking below the range low and the 200-day moving average for the first time since November today. The Riksbank has been sending strong signals of late that it would like to catch up with the inflation curve and SEK has responded. Just today, Riksbank Governor Ingves said a 2% repo rate seems plausible as the market leans for a full 25 basis point hike at next Thursday’s meeting. Other positives include the EU’s more robust fiscal stimulus outlook and even what should prove a stronger fiscal programme from Sweden too as defense priorities weigh (as it looks set to join NATO and has been threatened by armed nuclear Russian bomber flyovers over the last week) and to pay for the infrastructure and housing needed to absorb its huge immigration wave of the last 10 years. EURSEK 2-year yield spread has plunged to a new multi-year low. NOKSEK looks locally heavy and has plenty of room for some mean reversion back toward perhaps 1.0500.

AUD – RBA arguing in its minutes released overnight that the time for a rate hike is moving forward.  Somehow, the market is only 25% for a rate hike at the early May meeting, perhaps as we won’t have the next round of wage data (seen as more important than CPI due to the RBA’s focus on wages as the key for rising inflation) until May 18. But we will get Q1 CPI data next week. AUDUSD so far surviving a key support area, but needs 0.7500+ to reinvigorate the choppy bull trend.

JPY two-way volatility in play overnight and in today’s session – is this the top in JPY crosses for now? First the JPY move lower again yesterday and overnight as US yields rose to fresh highs and the BoJ announced another operation to defend its yield cap of 0.25% on 10-year JGB’s. But after USDJPY rose to a fresh 20-year high of 129.40 overnight, we have the pair coming back down hard as long US treasuries are heavily bid in today’s European session. Could this prove a near-term climax for now? Likely so, if 3.00% is the new cap for now on the US 10-year benchmark.

CNH on the move with a sharp weakening move that took USDCNH above 6.40 yesterday, which is range resistance as well as near  the 200-day moving average. Notable that the move is holding on a day in which the USD is also weakening. Hard to know what Chinese officialdom is thinking, but this sends a signal and we should watch for whether a follow-on move develops after the CNH tracked the USD all the way up recently.

Table: FX Board of G10 and CNH trend evolution and strength.
The most interesting developments in recent days have been the CNH losing altitude suddenly, and CHF doing likewise, while SEK is firming.

Source: Bloomberg and Saxo Group

Table: FX Board Trend Scoreboard for individual pairs.
Given above, SEKCHF charts worth a peek and NOKSEK is trying to roll over now to negative as SEK strength broadens. Note USDCAD with Canadian CPI up today as the pair has traded in a pivotal zone.

Source: Bloomberg and Saxo Group

Upcoming Economic Calendar Highlights (all times GMT)

  • 1230 – Bundesbank's Nagel to speak 
  • 1230 – Canada Mar. CPI
  • 1230 – Canada Mar. Home Price Index
  • 1400 – US Mar. Existing Home Sales
  • 1430 – EIA's Weekly Crude and Product Stock Report
  • 1525 – US Fed’s Daly (no-voter) to speak
  • 1530 –US Fed’s Evans (non-voter) to speak
  • 1700 – US Fed’s Bostic (non-voter) to speak
  • 1800 – US Fed’s Beige Book


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.