In the presidential election runoff, Macron of France will confront Le Pen, a far-right opponent.

• On April 24, Emmanuel Macron, the French leader, and his far-right opponent, Marine Le Pen, will compete in the final election.
• Early projections and exit polls indicated that incumbent Macron received the most votes, with 28.1-29.5%, while Le Pen followed closely behind with 23.3-24.4%.
• The Russia-Ukraine war and the rising cost of living have been the main focus.
• Support for Macron increased after Russia invaded Ukraine and he mediated earlier this year.

On Sunday, exit polls showed that French leader Emmanuel Macron and his far-right opponent Marine Le Pen led the first round of presidential elections. They will now compete in the final vote on April 24.

Early projections and exit polls indicated that incumbent Macron received the most votes, ranging from 28.1% to 29.5%, while Le Pen received 23.3% to 24.4%. Despite some political analysts' predictions of a tighter gap, all projections pointed towards a runoff between Macron and Le Pen in two weeks.

Turnout was reportedly 4% lower than the 2017 election.

Jean-Luc Mélenchon finished third in the 12-candidate field with approximately 20% of the vote. After the exit polls were released, most of the mainstream candidates who did not make the runoff immediately endorsed Macron. Mélenchon urged his supporters not to cast a vote for Le Pen in the second round.

In a speech Sunday night, Macron cautioned against complacency, stating that "nothing is decided" and emphasizing the need to work diligently to persuade more individuals to support him.

Inflation concerns

The Russia-Ukraine war and the rising cost of living were the main concerns during the first-round vote.

The French president's support had increased after Russia invaded Ukraine and he attempted to mediate between Kyiv and Moscow. He called for a cease-fire and urged the EU to take strong action against Russia.

In the run-up to Sunday's vote, Macron's momentum slowed down as he was occupied with his domestic campaign trail and the voter polls tightened until election day.

The conflict has intensified higher energy prices and inflation, which Macron's government has attempted to address. However, Le Pen, the leader of the anti-immigration National Rally party, has used this issue to her advantage in her campaign.

Links to Putin

Despite being associated with the far-right in France, Le Pen has been highly focused on the cost of living. The recent market uncertainty regarding a Le Pen presidency has been linked to concerns about Europe's political and economic unity in response to Russia's invasion of Ukraine.

Le Pen has previously expressed support for Russia and Putin, and has been critical of the European Union. She has made an effort to distance herself from Putin, and her campaign team has denied rumors that they were instructed to destroy thousands of flyers featuring a picture of Le Pen with Putin.

In the 2017 French elections, Macron and Le Pen faced off in the final round, with Macron winning 66.1% of the votes and Le Pen receiving 33.9%. In the first round, Macron received 24.3% of the vote and Le Pen 21.3%.

The loss of the run-off five years ago has caused Le Pen to shift her focus from leaving the EU and the bloc, and her election to the presidency could disrupt the bloc's plans.

Market reaction

Stephen Gallo, BMO Capital Markets' European head of FX strategy, stated that Sunday's outcome was largely anticipated, relieving tension in the FX market and providing some relief to the euro.

Gallo stated in a research note on Sunday that although the probabilities indicate a Macron win, the data on leveraged funds' net positioning in EURUSD does not suggest that FX investors anticipated a significantly different outcome.

The second-round vote is uncertain due to several factors, including abstentions, voter apathy, a televised debate on April 20, and the electorate's continued division.

Notably, the second round candidates barely obtained 50% of the total vote combined. There is a significant risk that many of the votes cast for the losing candidates in round one will not be allocated to either candidate in round two.

On April 24, Macron is predicted to receive 54% of the vote in a second-round poll conducted by Ipsos on Sunday, while Le Pen would receive 46%.

—CNBC’s Elliot Smith contributed to this article.