The euro began the week firmly on the front foot, surging to a five-month high against the dollar, after it emerged Emmanuel Macron and Marine Le Pen made it through the first round of the French presidential elections.

Macron, of the En Marche movement, took 23.7% of the vote on Sunday (23 April) while Le Pen, the leader of the far right Front National, took 21.7%. The former, the market's preferred candidate, is the hot favourite to win the run-off with one poll putting him at 68% to 32% ahead of his rival.

While for the first time in modern history no one from the mainstream centre-right or centre-left parties made it to the second round, investors believe a win for Macron would carry less risks than a Le Pen presidency.

The results saw the euro breach the $1.09 threshold for the first time since June, before retreating slightly as the first trading session of the week kicked off. However, by 8.50am BST, the euro remained 1.19% higher against the dollar, trading at $1.0856, and 2.24% higher against the yen, fetching ¥119.56.

"Macron's victory in the first round of France's presidential election was probably the best result possible for equities and the euro," said Neil Wilson, senior market analyst at ETX Capital.

"The market nightmare situation has been avoided. If the euro/dollar rate breaks the $1.10 level there could be further room to explore on the upside. A lot depends on what the European Central Bank says this week and the tone it takes."

Craig Erlam, senior market analyst at Oanda, said the rally in the euro overnight was a clear sign of markets breathing a sigh of relief after getting their forecast spectacularly wrong over the Brexit referendum and the US elections last year.

"Obviously there is still two weeks to go until the second round of voting and while Macron looks highly likely to succeed, the populist vote has surprised us in the past and may well again," he added.

"It will be interesting to see whether the same complacency that left us surprised last June creeps back into the markets in the coming weeks or if the same caution that spurred the relief rally overnight lingers."

In Britain, meanwhile, the pound felt the impact of the euro's rally, falling 1.23% to €1.1801 and losing 0.22% against the dollar, to fetch $1.2784.

Elsewhere, the dollar struggled for direction, even though investors on the other side Atlantic also welcomed the results of the first round of the French elections.

Sharp losses against the euro aside, the greenback was also down 0.27% and 0.19% against the Canadian dollar and the Swiss franc respectively, trading at CAD$1.3461 and CHF0.9944. However, the dollar rallied against the yen, trading 0.96% higher at ¥110.14 as investors fled safe havens in the wake of news from France.

"The dollar has surged higher over the weekend gapping back through the ¥110.20 area and opening up a return to the early April peaks at ¥111.60," said CMC Markets analyst Michael Hewson. "Last week's peak at ¥109.40-¥109.50 is likely to act as support in the short term."