It has been a good month-to-date for the Euro which currently holds the crown of the second-best performing currency in the G10 complex.

Only Sterling has bettered the single-currency.

Even against the next 10 grouping of major currencies is the currency doing well having risen against the majority of these.

“The Euro has rallied further than we expected recently, with help from markets effectively removing the risk premium from the French presidential election, well ahead of the second round runoff,” says Sean Callow, an analyst with Westpac Bank in Sydney.

Callow is specifically concerned with the Euro’s way forward against the Australian Dollar.

The Euro to Dollar exchange rate (EUR/AUD) has appreciated by 3.45% month-to-date and has now managed to make a minor gain when the whole of 2017 is taken into account.

Callow has written to clients on May 3 telling them to expect the Australian Dollar to gain the upper hand against its European counterpart going forward.

“A large overhang of speculative short EUR positions has helped fuel the euro gains. But we expect ECB president Draghi to push back hard on calls for a notably less dovish stance in June, with inflation still so far from target. This should keep a lid on EUR yields,” says Callow.

Regarding the Australian Dollar, recent underperformance has been notable owing to speculative long positions in the trading community under pressure from the slide in iron ore prices and bouts of risk aversion, especially linked to the Korean peninsula.

“Commodity prices probably won’t provide too much inspiration for AUD near term, but official data should remain supportive of AUD/USD. A better tone to Asian regional trade should also aid risk appetite, helping AUD recapture some of its recent lost ground on crosses including versus the Euro,” says Callow.

Callow suggests this provides scope in coming weeks for AUD/EUR to reach 0.70-0.71, or EUR/AUD to slip to 1.41-1.43.

“Euro depreciation beyond this area would require either an unexpected Euro slide (Le Pen?) or a sharp improvement in Australia’s sluggish domestic economy,” says Callow.