On Monday, the euro fell against the naira on the unofficial market after French President Emmanuel Macron declared a quick election in response to the far-right’s failure in the European Union vote.
The euro is currently losing significant support versus the Nigerian Naira, according to recent market action, which has made the EUR/NGN price lean bearish.
The euro is being impacted by the growing uncertainty surrounding the impending snap elections in France.
On the black market, the value of the naira increased below the N1600/Euro level as traders reduced the demand pressure on the European currency by reevaluating it. On Friday, it closed over N1631/Euro.
The geopolitical ramifications of the far-right’s hold on power in Europe contributed to the dollar’s rise versus the euro.
As summer approaches, the dollar is expected to have a positive view; the euro is expected to find it difficult to break over 1.10 against the dollar and is more likely to fall below the 1.05 support level.
In early morning London trading, the euro fell to a 21-month low of $1.075 and fell 50 basis points to a one-month low.
Meanwhile, the strong US NFP report discouraged Fed rate-cut bets and strengthened the US dollar, which helped restrain the upward movement of the European currency.
EuroSTOXX 50 equity futures were down 0.4%, extending a severe loss that started late last week, while French bond futures saw a slight decline.
When the rest of Europe’s markets open later today, investors’ attention will probably be drawn to Italy’s 10-year government bond yield differential above benchmark German paper.
Far-right hegemony over Europe
President Macron of France decided to call early legislative elections in an effort to salvage the situation.
In the EU election, Marine Le Pen’s National Rally party is certain to surpass Macron’s 15% share with 33% of the vote.
If the far-right National Rally party were to win a majority in parliament, he would be left without a say in internal matters.
This year, worries about France’s high debt levels have increased, and the possible impact of a return to political unrest on the nation’s economy may be receiving more attention.
Days before the EU election last month, Standard & Poor’s downgraded France’s sovereign debt, throwing a serious blow to the government’s financial management.
Though France is in the news, Macron is not the only organization suffering a major blow as a result of the recent European parliamentary elections.
The far-right Alternative for Germany (AfD) party placed second in the polls, underscoring the growing momentum in the run-up to the federal election in 2019.
They should earn a record high of about sixteen percent of the vote, according to predictions.
With nearly 26% of the vote, the far-right Freedom Party of Austria has taken the top spot in the national poll for the first time.
Overall, the biggest losers are the green parties. Left-wing groups, however, fared better in nations like Sweden, Finland, and Denmark.
It was anticipated that socialist, liberal, and centrist parties would maintain their majority in the European Parliament following Sunday’s vote.
Nonetheless, anti-EU nationalists received the most traction, raising questions about the capacity of strong countries to influence EU policy.
November brings significant U.S. elections, while July 4 brings a general election in the UK.
The naira and euro, however, have less room to sustain the momentum witnessed in March as prospects of a rate drop in the US have recently weakened, making global financial markets more fragile.
