Euro lower after short lived rally

The euro pulled further back from highs hit against the dollar and the yen on Monday in a short lived rally after Emmanuel Macron won the French presidential election.

EUR/USD was down 0.55% to 1.0936 by 10.43 ET after rising as high as 1.1022 overnight, the strongest level since early November.

Pro-EU centrist Macron topped 66% against just under 34% for far-right Marine Le Pen in the second round of voting on Sunday, delivering a result that most investors were hoping for.

The victory for Macron signaled that political risks in France and across Europe are receding, in the wake of the populist surge which resulted in Brexit and propelled Donald Trump to the White House.

Investors were also turning their attention to the difficulties Macron will face in implementing his proposed program of economic reforms.

With political risk seen fading investors were refocusing on monetary policy.

Recent economic reports have indicated that the economic recovery in the euro area is gathering momentum, which is expected to give the European Central Bank more room to tighten monetary policy before the end of the year.

EUR/JPY was down 0.47% at 123.39 after touching one-year peaks of 124.49 overnight.

The dollar was slightly higher against the yen, with USD/JPY at 112.84, close to an overnight high of 112.95.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.53% at 98.94 after falling to an overnight low of 98.47.

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