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Political tensions in the EU are affecting the euro

Political tensions in the EU are affecting the euro | 08 July 2024

08 July 2024, EUR/USD

Political tensions in the EU are affecting the euro

EURUSD:

EUR/USD is trading near 1.0830 on Monday in the early hours of Asian trading. Political uncertainty in France after the second round of voting in the parliamentary elections on Sunday is putting pressure on the euro (EUR). Later on Monday, the Eurozone Sentix investor confidence index for July will be released.

According to the Economist, exit polls showed that the left-wing New Popular Front (FNP), led by Jean-Luc Mélenchon, looks set to win the most seats in the second round of France's parliamentary election on Sunday. The FNP has secured at least 174 seats.

However, that is still not enough to win the 289 seats needed to control the lower house of parliament. Meanwhile, President Emmanuel Macron's centrist Ensemble alliance won 146 seats and Le Pen's party was pushed into third place with about 142 seats. The common currency attracted some sellers after opinion polls showed the latest round of French parliamentary elections would leave parliament in limbo.

On the other side, rising odds of the U.S. Federal Reserve (Fed) following a slow uptick in U.S. jobs data could lead to a weaker dollar and limit the pair's decline. Data released by the US Bureau of Labor Statistics (BLS) showed that US Non-Farm Payrolls (NFP) rose by 206K in June, following May's 218K increase (revised from 272K). This figure was higher than the forecast of 190,000.

In addition, the unemployment rate rose to 4.1% in June from 4% in May. Average hourly earnings fell to 3.9% y/y in June from the previous reading of 4.1%, matching market expectations. On Wednesday, traders will focus on US Consumer Price Index (CPI) inflation, which is expected to decline to 3.1% y/y in June from 3.3% in May.

Trading recommendation: Trade mainly with buy orders at the price level of 1.0850. We consider sell orders at the price level of 1.0785.

Connect 202% under drawdown and trade with double deposit! Bonus funds will help you increase your profits or withstand a sudden drawdown!

David Johnson
Analyst of «FreshForex» company
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