EUR/USD falls to one-month lows amid Eurozone political uncertainty

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The EUR/USD extends its decline to 1.0730 in the American session on Monday. The EUR/USD pair weakens due to political uncertainty in the Eurozone after French President Emmanuel Macron called for early elections, which heavily weighed on the Euro. Macron’s unexpected move on Sunday night came after exit polls indicated that the far-right National Rally (RN) party of Marine Le Pen won between 32% and 33% of the seats in the European parliamentary elections under the leadership of party president Jordan Bardella, which was more than double Macron’s centrist list.

After the dramatic announcement of early elections, Macron added: “I have confidence in our democracy, in letting the sovereign people have their voice. I have heard their message, their concerns, and I will not leave them unanswered,” The Guardian reported. However, there could be potential consequences if Macron’s party faces more losses than anticipated by exit polls, which could deepen uncertainty over the Euro’s outlook.

In the European session, ECB policymaker and Slovak central bank governor Peter Kazimir also said that the central bank should not rush to another rate cut, as progress on disinflation could be uneven. However, Kazimir remains confident that the ECB is moving toward the target. ECB President Christine Lagarde already said in the monetary policy press conference after cutting the central bank’s deposit facility rate by 25 basis points (bps) to 3.75% that the bank does not commit to any specific interest rate path and will remain data-dependent, as inflation could remain volatile in the coming months.

Technical Analysis: EUR/USD stabilizes below the 200-day DMA

The EUR/USD returns within the symmetrical triangle formation on a daily timeframe after failing to sustain the breakout move, suggesting the move was false and the overall trend has turned bearish. The main currency pair is expected to find support near the ascending trendline of the mentioned chart pattern, drawn from the low of October 3, 2023 at 1.0448, near 1.0636.

The long-term outlook of the pair has also turned negative as it falls below the 200-day EMA, which trades around 1.0800. The 14-period RSI drops sharply to 40.00. A decisive break below that level would trigger bearish momentum.