At 08:25 ET (12:25 GMT), EUR/USD traded 0.3% lower at $1.0730, with the pair well over a full percentage point lower over the course of the last week.
The European Parliament elections, which concluded over the weekend, saw sharp moves to the right in a number of countries, most prominently in France.
This prompted French president Emmanuel Macron to call a shock snap legislative election on Monday, a move which amounts to a roll of the dice on his political future, potentially handing major political power to the far-right party of Marine Le Pen.
Ratings agency Moody’s (NYSE:MCO) issued a credit warning after the event.
“This snap election increases risks to fiscal consolidation,” Moody’s said in a statement late on Monday, describing it as “credit negative” for the country’s Aa2 rating.
The EUR/USD pair looked to be breaking above 1.09 and escaping the year-to-date downtrend just last week, analysts at BoA Securities said, in a note dated June 10.
However, EU political turmoil (along with a strong U.S. jobs number) brought EUR/USD back to a 1.07-handle to start this week.
“On the back of these catalysts, the bearish sentiment is now broadening out to several EUR-pairs. Event analysis shows bearish continuation signal for EUR/USD as EUR put skew sharply widened by 4% over the weekend,” said BoA.
“Positioning analysis shows broad EUR downtrend signals vs GBP, JPY and SEK.”
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