Euro fell in European trade on Tuesday against a basket of major rivals, extending losses for the third straight session against the dollar and almost trespassing the five-week low amid mounting EU political risks. 

Anti-EU parties are on track to acquire a quarter of seats in the European Parliament in 2024, up from a fifth in 2019. 

The French governing party lost the EU vote to the far right, prompting French President Emanuel Macron to dissolve the local parliament and call for early elections. 

The EUR/USD pair is facing increasing pressures amid political uncertainty in the eurozone, with analysts expecting more losses to come.

The Price

The EUR/USD pair fell 0.25% today to $1.0740, with a session-high at $1.0773.

Euro lost 0.3% on Monday against the dollar, plumbing five-week lows at $1.0733 following recent European political developments. 

EU Parliament Elections

After election results were revealed, the far right groups controlled nearly a quarter of the Brussel-based Parliament, up from a fifth in 2019. 

Some analysts noted that even as centrist groups managed to maintain their majority, the new European Parliament is now the most right-wing it has been since its establishment. 

Early French Elections 

French President Emanuel Macron dissolved the parliament and called for early legislative elections after the results of the EU Parliament elections.

The governing French party lost the EU elections to the far right, forcing Macron to gamble with the new local elections to try and reassert authority. 

Analysts note that the odds of a surprise win by the far right in French elections will keep the euro under pressure in the short term.

Grim Outlook for Euro

Singapore Bank’s analysts pointed to French political risks as the main reason behind euro’s performance as the worst performing major currency this week.

They expect the EUR/USD pair to fall once more below $1.07 in the near term. 

Sterling declined in European trade on Tuesday against a basket of major rivals, resuming losses and almost touching two-week lows following UK labor data.

The data shows the UK labor sector is loosening, in turn reducing pressures on the Bank of England and boosting the odds of a rate cut next week.

The Price 

GBP/USD fell 0.15% to $1.2714, with a session-high at $1.2741.

The pair closed up 0.1% on Monday away from a two-week low at $1.2688. 

UK Labor Data

Earlier data showed the UK unemployment rate up to 4.4% in April from 4.3% in March. 

Average wages rose 5.9% in April, above estimates of 5.7%. 

UK jobless claims rose by 50.4 thousand in May, up from 8.4 thousand in the previous reading.

UK Rates 

The data underpinned the odds of a UK 0.25% interest rate cut in June as markets now await mainline UK inflation data next week.

The Australian dollar resumed its losses in Asian trade on Tuesday against a basket of major rivals, approaching five-week lows against its US counterpart following grim data 

A stream of weak Australian dollar underpinned hopes of early RBA interest rate cuts this year, in turn harming the Aussie’s standing.

The Price 

The AUD/USD pair fell 0.3% today to 0.6591, with a session-high at 0.6613.

The pair rose 0.5% on Monday, away from five-week lows at 65.76 cents. 

Grim Data

Earlier national data showed the NAB Australian labor conditions index down to 6 in May, missing estimates of 7, while the business sentiment index tumbled by 5 points to minus 3 in May. 

Weak Growth Data 

Last week’s data showed the Australian economy grew by 0.1% in the first quarter of 2024, below estimates of 0.2%. 

Australian Rates

The data boosts the odds of a 0.25% interest rate cut by the Reserve Bank of Australia before the year end to underpin the economy. 

Oil prices rose on Monday with gains expanding on the outlook of increasing fuel demand in the summer season.

Otherwise, Goldman Sachs’ analysts released a memo expecting Brent prices to rise to $86 a barrel in the third quarter. 

They put an expected trading range between $75 and $90 for Brent prices this year. 

On trading, Brent August futures rose 2.5%, or $2.01 to $81.63 a barrel, the highest since May 30. 

US crude July futures rose 2.95%, or $2.21 to $77.74 a barrel, the highest since May 30.