Analysis of Financial Markets Response to Political Events in France

Analysis of Financial Markets Response to Political Events in France

The recent parliamentary elections in France, where Marine Le Pen’s far-right party, the National Rally (RN), won the first round, had a significant impact on the financial markets. Exit polls revealed that the victory of RN led to a rise in the euro’s exchange rate against other currencies. The EUR/USD rate surged to its highest level since June 13, indicating the market’s reaction to the political developments in France.

Analyzing the EUR/USD chart, it is evident that at the end of June, the price formed a consolidation pattern in the form of an orange triangle. However, the bullish gap that occurred following the election results, depicted in green, broke through this pattern. According to technical analysis principles, if the height of the consolidation pattern is measured from the A-B extremes, the rise could extend to the level of 1.08400, projected from the breakout level. Nevertheless, for this target to be achieved, bulls must overcome the resistance zone of 1.080-1.078.

Market Reaction and Price Movement

Despite the initial bullish momentum, the EUR/USD price experienced a sharp reversal downwards at the Monday morning high, indicating the presence of supply forces in the market. This suggests a potential scenario where the price retraces back to the breakout level, entering the zone of the bullish gap. Traders need to be cautious and mindful of these price movements, as the market continues to react to the political events unfolding in France.

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The financial markets are closely intertwined with political events, as demonstrated by the recent response to the parliamentary elections in France. Traders need to stay informed and adapt their strategies to capitalize on these market movements effectively. FXOpen provides a reliable platform for trading forex and navigating the complexities of the financial markets.

Technical Analysis

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