Euro Weakens Amidst French Parliament Uncertainty The euro currency experienced a decline on Tuesday, despite staying above its recent lows, as political uncertainty emerged from the French parliamentary elections. Early projections indicate that President Emmanuel Macron’s centrist alliance is likely to lose its majority in the National Assembly, potentially creating a hung parliament. The possibility of a hung parliament has raised concerns among investors about the stability of the French government and its ability to implement reforms. The euro dropped below the 1.07 mark against the U.S. dollar but later recovered some ground. The decline in the euro reflects market concerns that a divided parliament could make it difficult for Macron to pass key legislation and address pressing economic issues. A hung parliament could lead to delayed or watered-down reforms, potentially affecting the country’s economic growth and stability. Analysts are closely monitoring the political situation in France, as the outcome of the elections could have implications for the wider Eurozone. A weakened Macron could lead to reduced cooperation among member states and potentially hinder the European Union’s ability to address common challenges. However, the euro has remained off its recent lows due to ongoing concerns about inflation and the ongoing conflict in Ukraine. These factors have supported the euro against other currencies, preventing a deeper decline. The euro’s performance in the coming weeks will likely depend on the political developments in France and the broader economic outlook in the Eurozone. Investors will be closely watching for news on coalition-building efforts and any potential impact on government policies.Euro Recovers Slightly After French Election Results, Dollar Gain EasesEuro Recovers Slightly After French Election Results, Dollar Gain Eases On Monday, the euro initially declined against the dollar but later recovered from its overnight lows as the French election results indicated a hung parliament. The US dollar’s recent upward trend reversed slightly after Friday’s US payrolls data fueled expectations of imminent interest rate cuts by the Federal Reserve. Following the surprise surge in support for left-wing parties in the French elections, President Emmanuel Macron called on Prime Minister Élisabeth Borne to remain in office while difficult negotiations to form a new government ensue. “We are still waiting to see if the coalition can secure the support of 240-250 lawmakers to form a functional government,” said Garth Appelt of Mizuho Americas. Concerns over the potential withdrawal of France from the eurozone eased after Eurosceptic candidate Marine Le Pen’s National Rally failed to gain a majority. The euro ended the day with a slight decline of 0.11% to $1.0824, having briefly reached its highest level since June 12. Meanwhile, the dollar index, which measures the US currency’s strength against its six major rivals, rose 0.04% to 104.99. The dollar’s decline on Friday stemmed from a weaker-than-expected June jobs report, which showed solid employment growth but highlighted underlying weaknesses. Markets are now awaiting comments from Federal Reserve Chairman Jerome Powell’s congressional testimony on Tuesday and Wednesday for further indications of an impending rate cut. In Japan, the dollar gained against the yen after data revealed a 2.5% increase in average worker wages in May, the highest rate in 31 years. The Bank of Japan expressed confidence in achieving its 2% inflation target, raising speculation of a potential interest rate hike by the central bank at its next meeting. The British pound held its ground against the dollar and euro after the Labour Party’s landslide victory in the UK election. In the cryptocurrency market, Bitcoin experienced a moderate decline of 0.08% to $56,312.The euro fell on Monday but stayed off its lows as markets digested the results of France’s parliamentary elections, which left President Emmanuel Macron’s centrist alliance short of an absolute majority. The euro fell 0.3% to $1.0523, after touching a low of $1.0495 earlier in the session. Macron’s alliance, Ensemble, won the most seats in the National Assembly but fell short of the absolute majority needed to pass legislation without support from other parties. The left-wing Nupes alliance, led by Jean-Luc Mélenchon, came in second place, while the far-right National Rally, led by Marine Le Pen, came in third. The outcome of the election has raised concerns about political gridlock in France, which could make it difficult for Macron to implement his economic agenda. Investors are also concerned about the potential for a hung parliament in Italy, where elections are due to be held in September. However, analysts said that the euro’s losses were limited by the fact that Macron is still likely to be able to form a government with the support of other parties. “The outcome of the French elections has increased uncertainty, but it is not a major shock,” said Ulrich Leuchtmann, head of FX strategy at Commerzbank. “The euro is likely to remain range-bound in the near term.”