Important Events Today:

14:00 UTC: USD – ISM Manufacturing Index.

The EUR/USD pair continues to rise for the third consecutive day, trading around the 1.0750 mark during Asian hours on Monday. Speculation that the Federal Reserve may cut interest rates in 2024 is weighing on the US dollar (USD), supporting the EUR/USD pair.

On Friday, the US Bureau of Economic Analysis reported that inflation in the US dropped to its lowest annual level in three years. The Personal Consumption Expenditures (PCE) Price Index rose by 2.6% year-on-year in May, down from 2.7% in April, in line with market expectations. Core PCE inflation also increased by 2.6% year-on-year in May, compared to 2.8% in April, matching forecasts.

Federal Reserve Bank of San Francisco President Mary Daly stated on Friday that monetary policy is working. However, it is too early to discuss when it would be appropriate to cut interest rates. Daly mentioned, “If inflation remains stable or decreases slowly, rates will need to be raised longer,” according to Reuters.

In France, the euro strengthened as Marine Le Pen’s party, the National Rally (NR), confirmed its status as the leading political force in the country in the first round of legislative elections, which saw the highest turnout in three decades. According to France 24, Le Pen’s party secured a clear, but not decisive victory, leaving the election outcome uncertain ahead of the second round of voting on July 7.

Regarding monetary policy, European Central Bank (ECB) Governing Council member Olli Rehn stated last week that the central bank could cut interest rates twice more this year. Recent data showed that annual inflation in France slowed to 2.5%, in line with expectations, while in Spain it decreased to 3.5%, slightly above expectations. Inflation in Italy, on the other hand, accelerated to 0.9%, as expected.

Recommendations: Trading predominantly with Buy orders from the current price level.