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Euro Gains against the Dollar after French Political Tension

March 22, 2017
By Anatol Thomas
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Euro, which was having a tough time for the past six weeks gained against the dollar. It reached more than $1.08, reaching its six-week high. This change is triggered by the change in the political tension in France. The centrist Emmanuel Macron did really well, during the French political debate on TV. His performance during the debate diverted the nation’s attention on him, when it was expected that Marine Le Pen may win the election in May.

In the past 4 days, the market was driven by the increase in the interest rates of the US Federal Reserve. Dollar was gaining steadily against all major currencies, but Euro was responsible for driving the dollar index down on Tuesday. The Federal Reserve speakers indicated that Trump’s administration will take its time to bring about the promised fiscal boost. This also resulted in a slight weakening of the dollar, which was exploited by Euro.

The populist Le Pen talked about taking France out of the single currency market. The result of the opinion poll showed that Macron is much favored as one of the top 5 choices for French presidency. The shift in political risks has helped Euro. The European Central Bank was also expected to introduce very loose monetary policy.

Euro gained 0.6% and it resulted in Dollar index to fall below 100, for the first time since February. It also gained against yen by 0.7%. Sterling also gained close to 1%, after the release of the inflation data.