The euro rallied to a six-month high against the dollar in early Asia-Pacific forex trading Monday after pro-European centrist Emmanuel Macron won the French presidency in a resounding victory over far-right rival Marine Le Pen.
The single currency reached $1.1023, its highest level since November, from $1.0998 on Friday but the gains were modest compared to the reaction following his first round victory last month with markets largely pricing in Le Pen's defeat.
However, the 39-year-old former investment banker's victory effectively eliminates any risk of France leaving the single currency bloc.
"It's probably a more measured response than I would have expected," Imre Speizer, senior markets strategist at Westpac NZ told AFP.
"It's the expected outcome. It's more emphatic than expected but there's no surprise element for the market in Macron winning."
Analysts said there were also questions over whether Macron will be able to push economic reforms through the National Assembly without a majority.
Phil Borkin, senior economist at ANZ Bank, said markets were breathing "a collective sigh of relief" at the result but cautioned the rally may prove to be short-lived.
"The bigger question is how much of a mandate will Macron's party get in the parliamentary elections coming up next month," he told AFP.
"That calls into question any longevity in a rally at this stage."
Initial estimates showed Macron winning between 65 percent and 66.1 percent of the ballots -- a higher than expected score - and Le Pen scoring between 33.9 percent and 35 percent.
Unknown three years ago, Macron is now poised to become one of Europe's most powerful leaders, bringing with him a hugely ambitious agenda of political and economic reform for France and the European Union.
But many observers are sceptical about Macron's ability to win a parliamentary majority, meaning he might have to form a coalition of lawmakers committed to his agenda.
The philosophy and literature lover is inexperienced, has no political party and must try to fashion a working parliamentary majority after legislative elections next month.
Furthermore, his economic agenda, particularly plans to weaken labour regulations to fight stubbornly high unemployment, are likely to face fierce resistance from trade unions and his leftist opponents.
He also inherits a country which is still under a state of emergency following a string of Islamist-inspired attacks since 2015 that have killed more than 230 people.
Le Pen, 48, had portrayed the ballot as a contest between Macron and the "globalists" -- in favour of open trade, immigration and shared sovereignty -- and her "patriotic" vision of strong borders and national identities.
-- Bloomberg News contributed to this report --
© 2017 AFP