Well, it seems the EUR isn’t too thrilled about the European Parliamentary election results. Shocker. With the center-right and right-wing making strides in France, Germany, and other big players, the currency is having a bit of a mini-morning-tantrum.

Apparently, this minor shake-up is enough to question the EU’s pandemic-era unity. The feedback loop is also very interesting this morning as a weaker EUR is seen in conjunction with higher EUR rates.. This is the classic “fade Europe” move in markets. And just to spice things up, Macron’s throwing an election, while young voters are ditching the green parties and cozying up to centrist and right-wing alternatives.

In my opinion, the green parties’ attempts at implementing a fantasyland energy policy have been the EUR’s worst enemy since 2021. Ultimately the election result is likely to pull in the direction of a more realistic approach to the energy question in the EU, which in turn is good news for the EUR, but such a bet is clearly leaning against the tape (and the mainstream) for now..

Chart 1: The EUR is a trade balance bet and ultimately an energy bet