Investing.com – Bearish euro sentiment is back, according to Bank of America Securities, in the wake of the European Parliament elections and increased political risk.
At 08:25 ET (12:25 GMT), it was trading 0.3% lower at $1.0730, with the pair down more than a full percentage point over the past week.
The European Parliament elections, which concluded last weekend, saw sharp moves to the right in a number of countries, especially France.
This prompted French President Emmanuel Macron to call a shock parliamentary election on Monday, a move that amounts to a throw at his political future, potentially handing major political power to the far-right Marine Le Pen party.
Credit rating agency Moody’s (NYSE:) issued a credit warning after the event.
“These early elections increase risks to fiscal consolidation,” Moody’s said in a statement late on Monday, describing the election as “credit negative” for the country’s Aa2 rating.
The EUR/USD pair appeared to break above 1.09 last week and escape its year-to-date downtrend, BoA Securities analysts said in a June 10 note.
However, political unrest in the EU (along with a strong US jobs figure) brought EUR/USD back to 1.07 this week.
“Thanks to these catalysts, bearish sentiment is now spreading to several EUR pairs. Event analysis shows a bearish continuation signal for EUR/USD as the EUR price rose sharply by 4% this weekend,” BoA said.
“Positioning analysis shows broad downtrend signals for the EUR against GBP, JPY and SEK.”
