Investing.com – The euro fell on Monday, falling to a one-month low, reflecting rising regional political uncertainty, while the US dollar awaits the Federal Reserve meeting later this week.
At 04:00 ET (08:20 GMT), the price fell 0.3% to 1.0764, after falling to a one-month low of 1.0748 earlier in the session.
The euro is slumping due to political uncertainty
The single currency fell on Monday after results from the European Parliament elections, which concluded on Sunday, showed Eurosceptic nationalists making the biggest gains.
This prompted French President Emmanuel Macron to call early parliamentary elections, taking a gamble on trying to restore his authority by advocating sharp gains from far-right political rival Marine Le Pen.
“Although Marine Le Pen’s National Rally party has moved away from the anti-Euro manifesto it launched in 2017, fears of shifting support for Ukraine could unnerve markets,” ING analysts said in a note.
“EUR/USD could very well have another lower level towards the 1.0700/0720 area once US investors get a chance to appreciate events in European politics.”
The dollar gives back some gains
The US dollar fell on Monday, giving back some of Friday’s strong gains, as traders awaited the latest meeting and the release of the latest inflation data.
At 4:00 AM ET, the , which tracks the dollar against a basket of six other currencies, was trading 0.1% lower at 104.790.
The dollar got a boost late last week, climbing to a nearly one-month high after May data showed stronger-than-expected growth, reducing perceived chances of Federal Reserve rate cuts this year.
Markets are now pricing in 36 basis points of Fed cuts this year, compared with nearly 50 basis points – or at least two cuts – before the jobs data.
The Fed wraps up its final two-day policy meeting on Wednesday and is widely expected to leave rates unchanged.
The spotlight will instead be on the chairman’s comments, any changes to economic projections and key US data.
fell marginally to 1.2724, with the pound trading in a tight range ahead of the Bank of England’s next quote later this month.
BOJ meeting threatens to be big
In Asia, trading was 0.1% higher at 156.90, with the yen remaining weak even as data showed Japan’s economy contracted slightly less than expected in the first quarter.
But the economy still continued to contract completely.
The meetings convene later this week and the central bank is expected to start tightening policy by reducing asset purchases. But how much the BOJ can tighten policy remains uncertain as the economy remains weak.
traded largely unchanged at 7.2477, with the pair holding near a six-month high as the Chinese economy continued to struggle with an uneven economic recovery.
