FX.co ★ US stock market: American indexes consolidate as Macron wins first round of French elections

S&P500

The US stock market consolidated on Friday, finishing last week above the 50-day MA line.

The NASDAQ lost 1.3% and the S&P 500 shed 0.3%, while the Dow Jones remained unchanged.

The key event of the weekend was the presidential election in France. Emmanuel Macron has won the first round, receiving 27.6% of the vote against Marine Le Pen's 23.4%. Macron and Le Pen will face each other in the second round. Jean-Luc Melenchon came in third with 21.9% of the vote.

Le Pen's chances of winning the second round are slim, as Melenchon's voters are extremely unlikely to vote for her. EUR/USD has gapped up on Monday, finding support in Macron's success in the first round. The pair advanced despite the US dollar rising on Fed's policy, as well as the situation in Ukraine.

The government of Germany is planning a €100 billion relief package for companies hit by fallout from the war in Ukraine.

In Russia, the Russian central bank has eased its currency exchange policy, suspending a 12% commission for buying foreign currency through brokerages. Furthermore, the regulator reduced the interest rate to 17% from 20%. However, the Bank of Russia has made its latest eurobond interest payment in rubles, in violation of its obligations. Russia is now facing a default in early May.

Brent crude oil was trading at $100.70 per barrel early on Monday. The commodity is under pressure from US SPR releases, which amount to 1 million barrels per day.

The S&P 500 is trading at 4,488 and is expected to be in the 4,450-4,520 range.

Last week, the Federal Reserve signalled it was ready to hike the interest rate by 0.5% at its May meeting and reduce its balance sheet by $95 billion per month, putting strong pressure on equities. However, the stock market is standing firm. The S&P 500 has consolidated above the 50 MA line over the past few days, suggesting a new uptrend could begin in the future.

This week, US CPI data for March will be released. Inflation is expected to rise by 1.3%, which could force the Fed to adopt an even more hawkish policy.

Economists surveyed by The Wall Street Journal has put the probability of US economy entering a recession in the next 12 months at 28% due to the Fed interest rate hike amid rising inflation.

USDX is trading at 99.99 and is expected to be in the 99.70-100.30 range.

Expectations of the Fed rate hike and monetary tightening have pushed US dollar to its yearly highs.

USD/CAD is trading at 1.2608 and is expected to be in the 1.2550-1.2700 range.

The pair has reversed upwards thanks to rising USD and falling oil prices. However, oil prices are still likely to weigh down on the pair.

Market players are expecting tomorrow's US CPI data. High inflation is likely to send the market downwards.