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EUR/USD rises to near 1.0770 as the first round of France’s legislative elections showed the far-right dominance, but by a small margin. The US Dollar declines as the expected fall in the US core PCE boosts Fed rate cut bets. Investors await the preliminary German HICP and US ISM Manufacturing PMI for June. EUR/USD gains 0.50% and jumps to more than a two-week high near 1.0770 in Monday’s European session. The major currency pair strengthens as exit polls of the first round of France’s parliamentary elections on Sunday showed that Marine Le Pen’s far-right National Rally (RN) is in a comfortable position but with a smaller margin than projected and a significant correction in the US Dollar (USD). The uncertainty over RN gaining an absolute majority has significantly improved the Euro’s appeal. “We might actually get less fears of more expansionary and unsustainable fiscal policy if the far-right party did a little bit worse,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia. Now, investors will turn to the second-round runoffs, scheduled for July 7. On the monetary policy front, investors look for cues about whether the European Central Bank (ECB) will deliver subsequent rate cuts. The ECB started reducing interest rates in early June after maintaining a restrictive interest rate stance for two years to tame price pressures prompted by pandemic-led stimulus. In Monday’s session, the major trigger for the Euro will be the preliminary German Harmonized Index of Consumer Prices (HICP) data for June, which will be published at 12:00 GMT. Economists expect annual HICP in the Eurozone’s largest economy to rise at a slower pace of 2.6% from the prior release of 2.8%. The monthly Consumer Price Index (CPI) is expected to rise at a higher pace of 0.2% from 0.1% in May.  The scenario…

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Filed under: News - @ July 1, 2024 8:06 am