Eurusd Shows Consolidation

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Eurusd Shows Consolidation

Eur/Usd Shows Consolidation Near 1.700

The EUR/USD has started the new week with a subdued momentum and appears to be in a consolidation phase. The EUR/USD pair experienced heavy losses and touched its lowest level in May, near the 1.0670 level.

For now, the EUR/USD has now recovered back towards 1.0700 but still remains vulnerable to another leg lower. After all that's the trend we are seeing since the last week and it is expected to continue.

France Snap Elections Puts Eur Under Pressure

One of the biggest concerns about shared currency is France's snap elections, as France is one of the leading economies in the Eurozone. According to the country's finance minister, the country faces severe risks of financial crisis as some of the political parties have heavy spending plans.

When we combine this political situation in the EU with the uptick in the USD, it makes sense for the EUR/USD to be negative in the short term.

In the USA, the Fed surprised everyone at its June meeting with the projection of only one rate cut against the forecast of three. This supports the upside in the US bond yields as well as the US Dollar. Amidst all of this, the inflationary pressure is also easing down in the USA, which has reignited hopes of an early rate cut in September.

Recent data from the USA also showed that import prices dropped in May, which supports the current outlook. Meanwhile, consumer confidence during June has taken a hit, which could prevent the USD from staging a big upside against the EUR.

Today, there are no big economic releases up ahead which leaves the EUR at the mercy of the USD. So if the DXY continues its current trajectory the EUR/USD will keep sinking lower. But if the DXY changes direction, the EUR/USD could start to go higher towards the 1.750, 1.780, and even the 1.800 handle.

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