Market Turmoil: Euro Falls as Far-Right Gains in European Parliament

EU | June 10, 2024, Monday // 12:05|  views

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The euro experienced a decline against major currencies in early trading on Monday, influenced by the political uncertainty following the European Parliament elections.

The success of far-right parties across Europe has raised concerns about the ability of mainstream parties to form majorities in the European Parliament, which are essential for passing legislation.

Political turmoil in France and Belgium further adds to the uncertainty within the European Union, as reported by BNR.

French President Emmanuel Macron's decision to dissolve parliament and call for early elections comes after Marine Le Pen's National Rally party secured approximately 32 percent of the European Parliament vote.

In Belgium, Prime Minister Alexander de Croo resigned following his party's disappointing performance in the elections for the new European Parliament.

The euro saw a decline of 0.45% against the US dollar, reaching a one-month low of USD 1.0754, and a 0.35% decrease against the British pound, now trading around GBP 0.8460, the lowest level since August 2022.

Against the Japanese yen, the euro experienced a 0.2% decrease, stepping back from 12-year highs recorded in late April and late May/early June this year, hovering around 169 yen.

The euro's decline is also attributed to a stronger US dollar, fueled by robust May US labor market data released last Friday, which has led to a revision of expectations for US interest rate cuts in the upcoming months, potentially affecting the Federal Reserve's decision at its September meeting.

Meanwhile, the European Central Bank recently lowered its key interest rates for the first time in five years but adopted a cautious stance towards further cuts in the future. ECB members have noted the presence of persistent, albeit moderate, inflation and anticipate it to remain above the 2% target level in the coming year. ECB President Lagarde emphasized during the press conference after the June 6 meeting that future actions will be based on incoming economic data, highlighting the bank's flexibility in interest rate adjustments.

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Tags: euro, europe, right, elections

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