Forex Analysis by Fawad Razaqzada covering: EUR/USD, CAC 40, US Dollar Index Futures. Read Fawad Razaqzada's latest article on Investing.com
has fallen about 170 pips, or 1.57% in the pace of two and a half sessions. Friday’s drop was triggered by a stronger US, while the further weakness so far this week has been in response to the weekend’s surprise election results in the European Parliament, prompting French President Macron to call on a snap election to halt the rise of rival and far-right Marine Le Pen.
However, these types of moves tend to fade quickly, and I wouldn't be surprised if that happens again once we head deeper into the trading week. However, it may lower the longer-term EUR/USD forecast, should support for the far-right governments rise further across the board, leading to policies that are potentially damaging to the economy.There are no major data releases on the economic calendar, until Wednesday.
The headline non-farm payrolls rose by 272,000, which was much stronger compared to expectations. While this was offset slightly by a downward revision to April’s figure and thewages came in hotter at +0.4% m/m. The data suggests the jobs market is not cooling as fast as indicated by other labor market data released in recent days. With wages remaining strong, this will discourage the Fed to start cutting rates sooner than September, at the earliest.
Else, if the Fed provides the strongest hint yet of a September cut then that could move the markets in the positive direction, as this will help reduce uncertainty. For what it is worth, I reckon the Fed will once again imply a “data-dependant” approach than pre-committing to a cut.
CAC 40 US Dollar Index Futures
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