LONDON (AFX) - The euro was slightly weaker in early afternoon trade as some speculative traders took profits following the surprise outcome in yesterday's first round of the French presidential elections, dealers said. "In terms of market positioning, speculative traders have been very long euro," said Neil Mackinnon, senior currency strategist at Merrill Lynch. "There's been some sort of profit-taking and you could pin some of that down to the French elections." Last night's election means that the far-right candidate Jean Marie Le Pen will face President Jacques Chirac in a face-off in two weekends time. "Although Le Pen has little chance of winning, there have been worries concerning the state of French democracy," said BNP Paribas' global head of forex strategy Hans Redeker. Though, the initial response was shock, Redeker thinks that result is "not necessarily euro negative" as it raises the chance of the conservative-liberal block forming the next government, ending the period of cohabitation. Meanwhile in Germany, there was another surprise local election result in the former communist state of Saxony-Anhalt, as the Christian Democrats ousted the ruling Social Democrats. Elsewhere, Merrill Lynch's Mackinnon said the dollar "remains on the defensive" on continuing worries about the current account deficit and the pace of economic expansion. He said Federal Reserve chairman Alan Greenspan will later today reiterate his "cautiously upbeat" view about the state of the US economy, though the Fed is unlikely to be in a hurry to raise rates. BNP Paribas' Redeker said the G7 and IMF meetings over the weekend produced little news. "While a more upbeat outlook on the global economy has been developing, rising oil prices and the unstable economic conditions in Argentina have been cited as risks," said Redeker. Sterling was relatively well-supported following suggestions by Bank of England governor Sir Edward George that UK rates will be kept on hold for some time yet.