Euro Relief Rally Continues as Traders Price Out Political Risk

• Euro Relief Rally Continues as Traders Price Out Political Risk

The euro climbed and volatility dropped as a relief rally following the first round of the French election continued.

The euro rose 0.2 percent to $1.0891, after reaching a five-month high of $1.0937 in early Asia trading on Monday. Bids at $1.0875-80 are supporting the currency and a move above $1.0915 would prompt more interest, according to a trader who asked not to be named because the person isn’t authorized to speak publicly. One-month implied volatility in euro-dollar has fallen as traders price out political risk in the eurozone after centrist Emmanuel Macron progressed to May’s French presidential run-off.

Investors’ focus is now shifting to the European Central Bank’s meeting later this week, where the governing council might acknowledge the improved economic outlook of the eurozone, according to economists at Morgan Stanley. In the U.S., President Donald Trump will call for cutting taxes for individuals and lowering the corporate rate to 15 percent to fulfill a promise he made during his campaign, according to a White House official.