Le Pen & sanction risk put euro under more pressure

The US dollar has risen across the board this week as the Fed’s hawkish message on “quantitative tightening”, renewed sanction risks in Europe, and the polling shift in favour of far-right candidate Marine Le Pen ahead of France’s presidential election put pressure on risk sentiment, especially in Europe. The euro is now around its weakest level in two years against the dollar and has lost ground against most other currencies too. The first round of the election is on Sunday; as we set out here, if Le Pen continues to make gains ahead of the second-round run-off on 24^th April, we expect that to put further pressure on the euro, and euro-zone financial markets generally.