It’s tough to see this bounce as being any more than a slight relief for now. There were no major surprises to the outcome of the first round of votes in the French elections. And I reckon that’s what markets are responding to mostly, alongside the fact that the worst-case scenario of there being a political standstill may be avoided.

EUR/USD daily chart

The pollsters have Le Pen’s far-right faction likely winning a relative majority with even a small chance of obtaining an absolute majority. I still hold reservations on the latter and in any case, it is still too early to be calling anything just yet. A lot can still change in the days ahead before the second round of votes on 7 July.

I outlined some of the more important details with regards to the parliamentary seats earlier here.

Going back to the euro, it opened with a gap higher today with EUR/USD consolidating gains around 1.0750-60 levels mostly. The high earlier touched 1.0775 but I would argue that the bounce on the day is not too outstanding.

The US ISM manufacturing PMI will be the next key risk event to watch later in the day.

Looking to the chart above, there is still the confluence of the 100 and 200-day moving averages at 1.0790-92 to work through. That alongside key offers at the 1.0800 mark. That will be the key resistance region in keeping a lid on any gains in the euro this week. And I reckon it will do just that.

Besides that, there are also some larger option expiries to take note of throughout the week itself.

On Wednesday, there will be a sandwich of expiries at 1.0700 (€1.5 billion), 1.0750 (€1.0 billion), and 1.0800 (€1.4 billion). On Friday, there are ones at 1.0700 (€1.7 billion) and 1.0800 (€1.9 billion). Those are also likely to factor into the equation in locking price action before we get to the US non-farm payrolls.

In the meantime, just look out for any developments on the French political front. That will be the other driver of EUR/USD price action before the big event on Friday.