EURUSD strengthens as the far right may fail to win an outright majority in the French elections.
EURUSD reaches a new three-week high near 1.0830 in Friday’s European session. The major currency pair increases as the Euro’s outlook improves ahead of the second round of French elections on Sunday, and the US Dollar (USD) remains down.
The US dollar falls due to several tailwinds, with the US NFP in focus.
The appeal for the Euro improves amid anticipation. That the Marine Le Pen-led far-right National Rally will fail to turn its triumph in the first round into an absolute A coalition of French President Emmanuel Macron’s entrist alliance. And the left-wing has tactically withdrawn at least 200 candidates from Sunday’s legislative elections, giving them a majority.
On the monetary policy front, expectations that the European Central Bank (ECB) may deliver additional rate cuts on July 18 has faded. As disinflation in the Eurozone looks to be halting. The preliminary core Harmonized Index of Consumer Prices (HICP). Which excludes volatile items, increased gradually by 2.9% year on year in June.
Meanwhile, Eurozone retail sales data for May was mixed. Retail sales grew by 0.3% year on year, against experts’ expectations that spending at retail establishments would hardly increase. On a monthly basis, Retail Sales expanded by 0.1% after falling 0.2% in April, but fell short of estimates of 0.2%.growth.
Daily Markrt movers: EURUSD is trading above the round level of 1.0800, while the US Dollar continues to fall.
Growing speculation that the Federal Reserve (Fed) may begin lowering interest rates following the September meeting has put significant pressure on the greenback. The US Dollar Index (DXY). Which measures the value of the US dollar against six major currencies, has lost ground for the seventh consecutive trading session, reaching a new three-week low near 105.00.
Traders dramatically increased rate-cut bets for September due to multiple factors. Such as Fed Chair Jerome Powell’s plain confidence that the central bank has made considerable progress in inflation, fading labor market strength, and contraction in the Services PMI.
ADP Employment Change report revealed an unexpected slowdown in private sector hiring.
The June ADP Employment Change report revealed an unexpected slowdown in private sector hiring. During the same period, the Services PMI contracted and reached its lowest level in four years.
The US Nonfarm Payrolls (NFP) data for June. Which will be released at 12:30 GMT, will be the main driver of the US Dollar in Friday’s session. The US NFP report projected to reveal that 190,000 new workers were employed, up from 272,000 in May. The unemployment rate is predicted to stay at 4.0%.
Investors will focus on Average Hourly Earnings data, a measure of wage growth that has been a major contributor to high inflation in the service sector. Annual average hourly earnings expected to have slowed to 3.9% from 4.1% in May. On a monthly basis, the wage growth indicator estimated to climbed at a weaker rate of 0.3% than the previous release of 0.4%.
