The EUR/USD pair is currently trading around 1.0700 as investors worry about potential risks of a financial crisis in France. This uncertainty stems from speculation that Marine Le Pen’s far-right National Rally (RN) could form a new government, leading to adverse effects on the country’s fiscal situation. This has caused the Euro to lose its appeal and remain under pressure in the market.
French Finance Minister Bruno Le Maire warned that France could face a financial crisis if either the far right or left won the elections due to their spending plans. Additionally, the European Central Bank (ECB) policymakers are cautious about cutting interest rates, as they are concerned about wage growth and its impact on price pressures in the Eurozone economy.
On the technical front, the EUR/USD pair is expected to see more downside towards 1.0630, with support levels at 1.0636 and resistance at 1.0750. The long-term outlook has turned negative as prices dropped below the 200-day Exponential Moving Average (EMA), with the 14-period Relative Strength Index (RSI) falling below 40.00.
The US Dollar Index (DXY) is currently correcting near 105.50 as market speculation for two rate cuts by the Federal Reserve (Fed) this year is countered by the Fed’s projection for only one rate cut. Investors are closely watching the US monthly Retail Sales data for May, which is expected to show a 0.3% increase after remaining flat in April. A positive Retail Sales data could strengthen the USD.
The Retail Sales data, released by the US Census Bureau on a monthly basis, is a key indicator of consumer spending in the US economy. A high reading is typically seen as bullish for the US Dollar, while a low reading is considered bearish. The Retail Sales data is adjusted for seasonal variations and holiday differences, providing insights into the overall health of the US economy and consumer sentiment.
In conclusion, the EUR/USD pair is trading cautiously around 1.0700 amid uncertainties surrounding the French elections and concerns about a potential financial crisis in France. The USD Index is correcting near 105.50 as market speculation for rate cuts by the Fed is balanced by the Fed’s projection for only one rate cut. Investors are eagerly awaiting the US monthly Retail Sales data for May, which could provide further insights into consumer spending trends and impact the strength of the US Dollar.
