How safe is the euro?

How safe is the euro? Well, that's tied to another question: Who will win the French presidential election?

These are the major market indexes and they show that the French market was not particularly worried about the outcome of the first round of French election. Nor are they worried about the outcome of the next round and this suggests a Macron victory .

The French CAC chart shows a strong well-supported trend with good Guppy Multiple Moving Averages (GMMA) indicator behavior. Investors are not worried, according to the long-term group of averages. The wide separation shows strong trend support.

The traders — as shown by the short term group of averages — are also very confident it will be business as usual after the elections. The short-term group of averages is also widely separated, showing strong confidence in a non-disruptive election outcome.

The breakout above resistance near 5,250 is very bullish and does not indicate a euro exit. This breakout is a relief reaction, so there is a good probability the market will retreat and use 5250 as a support and consolidation level prior to a continuation of the uptrend.

Although Le Pen talks of leaving the euro, the French market suggests this is unlikely to happen. The French public also apparently believes this is a low probability. If they thought otherwise, then we would already see a run on the banks as people took their money out before it was threatened with devaluation by a euro exit.

None of this has happened, and this suggests that Macron will be the next president of France. The euro is not dead but the euro short trade is.

Source: Bloomberg

Trader Bozhidar Arabadzhiev

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