Euro takes a tumble amid Macron’s election surprise

10 Qershor 2024, 12:50Economy TEMA

Euro takes a tumble amid Macron’s election surprise

June 10, 2024 — The euro fell sharply on Monday, hitting a one-month low against the US dollar, as the market reacted to political uncertainty in France. French President Emmanuel Macron's surprise call for a snap legislative election following heavy losses for his centrist bloc in the European Union vote added to the euro's woes.

The euro slid to $1.0764 in early trading, before recovering slightly to $1.0776. The currency has now fallen more than 2.5% against the dollar this year. The euro also hit a one-month low against the pound sterling and eased 0.2% against the Japanese yen.

Analysts attribute the euro's decline to a combination of factors, including the unexpected French election announcement and a stronger-than-expected U.S. jobs report on Friday. The robust U.S. labor market data has led traders to revise their expectations for when the Federal Reserve will cut interest rates and by how much.

The European Central Bank (ECB) reduced interest rates last week, as anticipated, but provided little insight into the future direction of monetary policy due to persistently high inflation. The ECB's actions, coupled with the political uncertainty in France, have added to the downside pressures on the euro.As the market grapples with the implications of Macron's decision, the focus now shifts to the upcoming U.S. inflation data and the Federal Reserve's meeting later this week. The Bank of Japan is also set to hold its monetary policy meeting, with expectations that the central bank will maintain short-term interest rates in a 0-0.1% range.

 

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