EUR/USD Pares Gains Ahead of Fed Policy Update, Snapping Seven-day Winning Streak

EUR/USD fell on Monday as the French election results were confusing and the policy direction for the euro was unclear. The victory of the minority coalition government in France excluded the far-right parties from the leadership race after they were defeated on fiscal grounds in the previous parliamentary elections. However, the victory was not decisive as the ideologically conflicting League parties will be in a policy deadlock in the coming months.

Today’s foreign exchange market: focus on Fed Chairman Powell’s speech

Federal Reserve Chairman Jerome Powell will present his semi-annual monetary policy report to the US Senate Banking Committee this week, which will be the first of his two testimonies. Powell will then make a second appearance on Wednesday to present the same report to the US House of Representatives Financial Services Committee.

Later this week, the United States will release key inflation data. The US Consumer Price Index (CPI) inflation rate will be released on Thursday, and the Producer Price Index (PPI) wholesale inflation rate will be released on Friday. Some traders who hope that inflation will fall to push the Federal Reserve to cut interest rates sooner rather than later may be disappointed. Forecasts show that the CPI and PPI data are expected to remain stable or slightly increase.

The final German inflation data will be released during the European session on Thursday. Germany’s Harmonized Index of Consumer Prices (HCOB) inflation is expected to remain at 2.5% on an annual basis as inflationary pressures continue to prevent the Bundestag from achieving its 2% inflation target.

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