The euro kicked off the week with a strong upward trajectory in global financial markets, capitalizing on a weakened U.S. dollar during a U.S. holiday that sapped dollar liquidity. The EUR/USD pair stabilized in positive territory above the current support level of 1.1700, as the dollar remained on a downward trend. The pair climbed to 1.1702, up from the previous daily close of 1.1684, though it dipped to a session low of 1.1683 compared to a high of 1.1736.
Last week, the euro closed with losses, pressured by negative economic data, political turmoil in France, and uncertainty surrounding peace talks for the Ukraine conflict. The GfK Consumer Confidence Index for the eurozone fell to a five-month low, signaling bearish sentiment that fueled selling of the single currency. France’s political instability, as the eurozone’s second-largest economy, further weighed on the euro’s price action, given its critical role in the region’s economic stability.
French Prime Minister François Bayrou called for a parliamentary vote of confidence, risking the collapse of the current government amid heated debates over his plans for sweeping budget cuts, which have sparked significant political tensions. On the geopolitical front, uncertainty continues to cloud peace negotiations aimed at ending the war in Ukraine, adding to the euro’s challenges. Can the euro sustain its holiday-driven rally, or will political and geopolitical headwinds dim its shine?
