Two Trades to Watch: CAC, EUR/USD

The CAC is climbing today, along with its European rivals, despite the fact that the French index has outperformed its peers this week.

The CAC has dropped more than 3% this week, compared to a 2% drop in the DAX and a 0.5 percent increase in the FTSE.

The CAC's weakness might be due to mounting anxieties over the forthcoming French presidential elections, with the market suddenly waking up to the possibility of Marine Le Pen, the far-right contender, winning.

Macron remains the favorite, but the polling margin has narrowed significantly since the two clashed in the last round of the 2017 election.

Where does the CAC go from here?

The CAC continued its rally from its low of 5760 on March 7 until hitting resistance just outside the 200 sma at 6830 and reverting downward.

The price fell below the 50 SMA before finding support around 6450, which is presently acting as a backstop. The RSI is at a neutral level, indicating that the market is consolidating.

Traders may be on the lookout for a breakthrough. Buyers will be looking for a move above the 50 sma of 6650 to expose the 200 sma of 6780 and a retest of the 6830 high to build a new high.

A fall below 6450 might drive a selloff towards 6260, the July 21 low, according to sellers.

For the seventh day in a row, the EUR/USD has fallen.

For the seventh day in a row, the EUR/USD has fallen. Even the ECB's more hawkish minutes from yesterday failed to raise the euro.

The euro is losing ground as investors price in the possibility of a Le Pen victory after she narrowed the deficit in the polls this week.

Today's Eurozone data isn't very noteworthy; nevertheless, ECB President Mario Draghi is scheduled to speak.

The dollar is supported by forecasts of a more hawkish Fed, as well as positive employment data from the previous day.

Unemployment claims dropped to 266k from 171k, the lowest level in 50 years. There is no high-impact data from the United States today.

Where does the EUR/USD pair go from here?

EUR/USD retreated from the 50 sma, dropping below 1.10, a crucial psychological mark as well as the bottom band of a multi-month declining channel.

While it stays outside of oversold territory, the RSI signals to additional falls. 1.08, the 2022 low, provides support ahead of 1.0730, the April 2021 low.

Before reaching 1.10, any recovery would have to surge over 1.0940, the March 28 low.