- The EUR/USD pair is expected to hover around 1.1695 during Tuesday’s Asian session.
- Ongoing geopolitical tensions from the Russia-Ukraine conflict and concerns over a political crisis in France will likely weaken the Euro.
- The Federal Reserve’s dovish stance may help mitigate losses for the pair.
The EUR/USD pair has started to lose steam, settling at approximately 1.1695 as it interrupts a three-day winning streak during Asian trading hours on Tuesday. This shift puts pressure on the stronger USD. Investors are keenly awaiting a preliminary report on the Eurozone Harmonized Consumer Prices (HICP) along with the US ISM Manufacturing Purchase Manager Index (PMI) for August, set to be released later today.
The Euro is facing pressures due to the persistent conflict between Russia and Ukraine. Reports indicated attacks on energy facilities in both northern and southern Ukraine over the weekend, contributing to heightened concerns.
Ukrainian President Volodymyr Zelensky has pledged to respond with further strikes deep into Russian territory. The ongoing strife is pushing energy prices higher, which adds to the geopolitical uncertainties in the Eurozone, resulting in added selling pressure on the Euro.
On the political front, French Prime Minister François Bailloux recently expressed confidence in his government amid fears of a recession. A Reuters poll suggests that a majority of the French population is calling for a new national election, reflecting a growing dissatisfaction with the political landscape and potentially increasing uncertainty, which may affect the DXY in the short term.
Meanwhile, remarks from Federal Reserve officials last week indicate a more cautious approach to economic policy, acknowledging signs of slowing activity. This could lead to a weaker dollar. According to the CME FedWatch tool, market expectations have shifted, with nearly 89% predicting a 25 basis points cut in September, although this could change based on forthcoming information.
