EUR/USD: Macron wins French election - 'Buy The Rumor, Sell The Fact' (Barclays)

Barclays Capital FX Strategy Research argues that the victory of Emmanuel Macron carries the risk of a 'buy the rumor, sell the fact' for EUR/USD.

Such a risk, according to Barclays, implies a down-move in EUR/USD, given the current long EUR pre-positioning and given that the EUR political-risk premium was reduced significantly by the “benign” first round outcome.

In line with this view, Barclays expects EUR/USD to depreciate mildly over the remainder of this year, as monetary policy divergence and some residual political-risk premia weigh on the common currency.

Barclays targets EUR/USD at 1.09 by the end of Q2, and at 1.06 by the end Q3.

EUR/USD is trading circa 1.0980 as of writing.