Despite the uncertainty surrounding the formation and composition of France’s new government, UBS highlighted that an immediate conflict between France and the European Union appears to be off the table.
The elections’ outcome has seemingly reduced the chance of near-term volatility for the euro, which some FX market participants might have anticipated. The lack of a potential conflict with the EU following the French elections has tempered expectations for immediate turbulence in the EUR currency.
UBS’s analysis suggests that while the results of the French parliamentary elections were not the worst-case scenario for the euro, they also did not particularly bolster the currency’s prospects. The bank’s stance indicates that, despite the political developments, there are still underlying challenges that could influence the EUR/USD rate.
The bank’s unchanged target reflects a view that the French election results have not significantly altered the trajectory for the euro against the dollar.
The forecast of 1.0500 for the EUR/USD pair remains in place as UBS assesses the broader implications of the election outcomes on the currency market.
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