The euro dropped to $1.0764, its lowest since May 9, after French President Emmanuel Macron called a snap election following a significant defeat by far-right parties in the European Union vote. This political uncertainty in the euro zone’s second-biggest economy has pressured the euro, which was last down 0.24% at $1.0776. Meanwhile, the dollar remained steady, with the dollar index reaching 105.09, its highest since May 30, as investors awaited the Federal Reserve meeting and U.S. inflation data later in the week.
The European Central Bank’s recent rate cut did little to alleviate concerns, as inflation remains above target. In contrast, U.S. nonfarm payrolls significantly surpassed expectations, adding 272,000 jobs in May, leading traders to adjust their expectations for future Fed rate cuts. The focus now shifts to Fed Chair Jerome Powell’s comments and the economic projections from the policymakers at the upcoming meeting. The Bank of Japan is also set to hold its monetary policy meeting, with expectations of maintaining current short-term interest rates.