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Euro Remains Soft Amid Political Concerns, EURGBP Extends Below 0.8500

FOREX
  • Single currency weakness is garnering much attention to start the week as the post-NFP declines for EURUSD have built momentum, exacerbated by heightened political concerns following European parliamentary elections. EURUSD has weakened 0.4% on Monday as we approach the APAC crossover, notably below support at 1.0788, the May 30 low.
  • The independent Euro weakness thrusts multiple EUR crosses into the spotlight, that have been breaching/approaching significant technical levels.
  • EURGBP is most interesting here, having closed below the 0.8500 mark for the first time since August 2022 on Friday. Further weakness has seen the cross clear support at 0.8484, the May 29 low and bear trigger, confirming a resumption of the downtrend. Sights are on 0.8408 next and 0.8340 below here as we approach tomorrow’s labour market data from the UK. Resistance moves down to 0.8519, the 20-day EMA.
  • Positioning extremes are also likely contributing to the sharp reversal lower for EURCHF (-0.42%), having noted that the net short CHF position now sits at 46.3% of open interest - the largest short in G10, having overtaken the JPY in the past month. This could provide scope for a continuation lower for EURCHF ahead of the June 20 SNB decision.
  • Slightly firmer equities see the Antipodeans outperform, with EURAUD and EURNZD both down around 0.7% on the session.
  • Event risk comes thick and fast this week, starting with UK labour market figures (Tue) and GDP (Wed). Focus then turns to Wednesday’s key US CPI release before the June FOMC decision. Australia employment crosses Thursday before the BOJ decision rounds off the week.
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