Investing.com – The euro fell to a one-month low on Monday amid rising regional political uncertainty, while the U.S. dollar awaits a Federal Reserve meeting later this week.
At 04:00 ET (0820 GMT), the price was down 0.3% at 1.0764, after falling to a low of 1.0748 earlier in the session, a one-month low.
Euro falls due to political uncertainty
The single currency fell on Monday after European Parliament election results on Sunday showed Eurosceptic nationalists making the biggest gains.
That prompted French President Emmanuel Macron to call early legislative elections, taking risks to try to restore his power after dramatic gains by 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, concerns about shifting support for Ukraine are causing nervousness in markets,” ING analysts said in a note.
“EUR/USD could well take another move lower towards the 1.0700/0720 area once US investors have had a chance to fully appreciate developments in European politics.”
The dollar returns part of the profit
The US dollar fell on Monday, giving back some of Friday’s strong gains as traders awaited the latest meeting as well as the release of the latest inflation data.
At 04:00 ET, the index, which tracks the U.S. dollar against a basket of six other currencies, was trading 0.1% lower at 104.790.
The dollar strengthened late last week, rising to near a one-month high, after data showed stronger-than-expected gains in May, reducing the perceived chances of the Federal Reserve cutting rates this year.
Markets are now pricing the Fed’s rate cut this year at 36 basis points, down from nearly 50 bps. (or at least two reductions) before the release of employment data.
The Fed wraps up its final two-day policy meeting on Wednesday and is expected to leave rates unchanged.
Instead, the focus will be on the chairman’s comments, any changes in economic forecasts, and key US data.
fell slightly to 1.2724, with sterling trading in a tight range ahead of the Bank of England’s next publication later this month.
Bank of Japan meeting is important
In Asia, trading rose 0.1% to 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 was still in recession.
The meeting will take place later this week and the central bank is expected to begin tightening policy by cutting back on asset purchases. But how much the Bank of Japan will be able to tighten remains unclear, given that the economy remains weak.
trading virtually unchanged at 7.2477, with the pair remaining close to six-month highs as the Chinese economy continues to struggle with an uneven economic recovery.