The euro remained stable on Monday, with EUR/USD trading at 1.0714, up 0.10% on the day. The recent market anxiety triggered by the upcoming snap parliamentary election in France led to a sell-off in France’s financial markets and a 1% decline in the euro over Thursday and Friday.
Despite the market turmoil, ECB Chief Economist Philip Lane reassured investors that the ECB would not intervene, as the recent market movements were not considered disorderly. Lane also expressed confidence in inflation reaching the 2% target by 2025, even though the June CPI release showed an acceleration in inflation. The headline CPI rose to 2.6% in June from 2.4% in May, while the core rate increased to 2.9% from 2.7% in May. The final estimate, expected to be confirmed on Tuesday, could complicate the ECB’s plans for interest rate cuts due to higher inflation.
In the US, the UoM consumer sentiment index fell for the third consecutive month to 65.6 in June, below the market estimate of 72. This decline, along with unchanged inflation expectations at 3.3%, indicates that the Fed may face challenges in bringing inflation down to the 2% target.
From a technical analysis perspective, EUR/USD is currently testing resistance at 1.0709, with further resistance at 1.0743. The next support levels are at 1.0666 and 1.0628.
Overall, the market remains cautious due to the upcoming French election and inflation concerns, with investors closely monitoring economic indicators and central bank actions. For more detailed information and analysis on forex, commodities, and global indices, MarketPulse provides timely and accurate updates on major economic trends and events affecting different asset classes. Please note that the information provided is for general purposes only and not investment advice.