Euro: Le Pen ruling seen as low impact – ING

Francesco Pesole at ING argues that Marine Le Pen’s eligibility ruling matters more for French politics than markets, as investors have largely priced in a National Rally (RN) victory under Le Pen or Bardella with fiscal prudence. He sees limited reaction in the Euro (EUR), with EUR/USD potentially retesting 1.1400.

Politics overshadowed by market pricing

"All eyes in Europe are on a Paris appeal court ruling on Marine Le Pen’s embezzlement case. She remains banned from office, and if upheld, the RN is likely to be led into the April 2027 presidential election by Jordan Bardella."

"Both Le Pen and Bardella are ahead of other potential candidates in the polls, but a reversal of Le Pen's ban could strengthen the RN and shift expectations in favour of a Le Pen candidacy over Bardella."

"For now, polls suggest Le Pen or Bardella would beat Mélenchon comfortably, with tighter run-offs versus centre-right (and likely market-friendly) candidates such as Edouard Philippe and Gabriel Attal."

"We doubt this event has great market potential though. We suspect OATs and the euro can be seriously unnerved only by a surge in support for left-wing candidates like Jean-Luc Mélenchon at this stage."

"We think markets have largely priced in a Le Pen or Bardella win, and that either would deliver sufficient fiscal prudence to limit bond volatility, potentially along the lines of Giorgia Meloni’s approach in Italy."

"Today, we don’t expect much action in the euro anyway. We see a risk of 1.1400 being retested soon, but low volatility may be the name of the game considering no strong data or central bank inputs."