No significant events expected today.

The EUR and USD pair starts the new week on a subdued note and consolidates its recent significant losses to the lowest level since early May, around 1.0670-1.0665, reached last Friday. Spot prices are currently trading around the 1.0700 mark and appear likely to continue the downward trajectory observed over the last two weeks.

The euro continues to be undermined by fears that snap elections in France will worsen the financial situation in the Eurozone’s second-largest economy, amid leadership of the right-wing “National Front” in public opinion polls. On Friday, French Finance Minister Bruno Le Maire stated that the country faces a financial crisis if either the right or the left wins due to their plans for significant spending. This, coupled with the modest growth of the US dollar (USD), confirms a negative outlook for the EUR/USD pair in the near term.

The hawkish stance of the Federal Reserve (Fed) following its June meeting, which foresees only one rate cut in 2024, continues to support the rise in US Treasury yields. Moreover, the ongoing geopolitical tension in the Middle East is another factor supporting the “safe” US dollar, indicating that the path of least resistance for the EUR/USD pair is downwards. However, signs of weakening inflationary pressure in the US keep the door open for the first Fed rate cut in September.

Rates were bolstered by data published on Friday in the US, which showed that import prices unexpectedly decreased in May, further strengthening the outlook for domestic inflation. Additionally, the University of Michigan survey showed that consumer sentiment in the US sharply deteriorated in June, which in turn may keep dollar bulls from aggressive bets and help limit losses for the EUR/USD pair. No significant economic data will be released from the US on Monday, so spot prices will remain under the influence of the dollar.

Recommendations: Predominantly trade Sell orders from the current price level.