The euro just did something that few expected

The currency and commodity markets are under close watch following Sunday's French presidential election.

"Everybody was expecting a pretty bullish move in the euro following the election; well, it seems we have a little bit of resistance in play here," TradingAnalysis.com founder Todd Gordon said Monday on CNBC's "Trading Nation."

French centrist Emmanuel Macron's victory over far-right rival Marine Le Pen was considered a positive for the broader markets. Immediately after the election the euro rallied to its highest levels since November before falling and underperforming other major currencies.

Supporters celebrate at a rally for Emmanuel Macron, outside the Louvre on May 7, 2017 in Paris, France.
Owen Franken | Getty Images
Supporters celebrate at a rally for Emmanuel Macron, outside the Louvre on May 7, 2017 in Paris, France.

Le Pen had promised to pull France out of Europe's common currency. With Le Pen's loss, many traders expected the euro would continue to rally; but Macron's election appears to have been a "sell the news" event for traders.

The key theme Gordon observed on Monday was as that euro rally ran out of steam, the U.S. dollar gained and thus commodities have been depressed.

Examining a chart of the FXE, the exchange-traded fund that tracks the euro, Gordon pointed to a pattern he called "three drives to a top." The fund rallied then fell beneath resistance, repeated that move, and was then finding resistance once more into the fund's $106 level.

The UUP, which tracks the U.S. dollar, has been doing something similar, but in reverse. "It seems to me we're trying to carve some support into the 25 area," he said.

Confirming what he has observed in the currency market, Gordon said, commodities are struggling against a stronger dollar. Turning to a chart of the GLD, an ETF that tracks the price of gold, Gordon notes the GLD has broken uptrend support. The GLD was expected to hold support just below the $120 level, he said, and that failed.

"Now we can lean against that as resistance," he said. And the gold miners are even weaker, taking a look at the GDX. "This guy's clearly broken uptrend support right around the $23 region, so miners are looking weak," he said.

Copper fell in Monday trading, too.

"We're seeing, following the French election, this euro rally running out of steam and giving some support to the dollar. That story is being corroborated by the commodity ETFs," he said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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