Global macro overview for 08/05/2017:
Emmanuel Macron won a decisive victory in the second round of France's presidential election, but the market response to such a scenario has been modest so far. Finally, the entire political risk premium was erased after the second round results. Today, the EUR/USD pair managed to beat Friday's peak by mere 25 pips. A few minutes later after the opening bell, the common currency began to lose value under profit-taking action. So, there is no room for the common currency to gain on the fading political risk premium. Moreover, the market might start to price in the possible ECB monetary policy normalization and positive trends in the Euro area balance of payments. There is only a month until the next ECB meeting and about a month and a half to the next FED meeting.
Let's take a look at the EUR/JPY technical picture on the H4 timeframe. The pair fell about 150 pips from the top at the level of 124.51 and now is trading at the technical support of 122.88. The market conditions are overbought and there is a visible bearish divergence between the price and the momentum oscillator, so the bias is to the downside. In a case of a breakout below 122.88, the next support is seen at the level of 121.97.
