The EUR/USD pair maintained its recent gains on Monday, consolidating above 1.0700 after hitting a two-week high of 1.0770. This strength was driven by a combination of easing concerns about the French parliamentary elections and softer-than-expected German inflation data, fueling speculation of further European Central Bank (ECB) rate cuts.

Market Drivers: Political Stability and Shifting Rate Expectations

• French Election Relief: Exit polls from the first round of the French parliamentary elections showed a less dominant performance than expected by Marine Le Pen’s far-right party, easing concerns about potential political instability and boosting the Euro.
• Softer German Inflation: Preliminary German HICP data for June came in below forecasts, raising expectations of additional ECB rate cuts as the central bank continues to combat inflation.
• US PCE Data: The release of weaker-than-expected US core PCE data on Friday further supported the Euro, as it reinforced expectations of earlier Fed rate cuts and weakened the US Dollar.

Economic Data in Focus

Investors are now eagerly awaiting the release of preliminary Eurozone HICP data for June, which could further influence the ECB’s monetary policy decisions. In the US, the ISM Manufacturing PMI report for June is also on the radar, with expectations of a slight improvement in factory activity.

Technical Analysis: EUR/USD Faces Resistance at 200-Day EMA

The EUR/USD pair has rebounded from the upward-sloping border of a symmetrical triangle pattern on the daily chart. However, the pair remains below the 200-day Exponential Moving Average (EMA), indicating a bearish bias in the broader trend.

The 14-period Relative Strength Index (RSI) is currently in the neutral range, suggesting indecision among market participants.

Key Takeaways:

• The EUR/USD pair is holding steady above 1.0700, supported by easing concerns about the French elections and softer German inflation data.
• Market expectations of further ECB rate cuts are rising, while the weaker US Dollar is also contributing to the Euro’s strength.
• Upcoming economic data releases, including the Eurozone HICP and US ISM Manufacturing PMI, will be crucial for determining the pair’s future direction.