Ella 
EUR/USD remained subdued for the third day on Monday, trading around the 1.0690-1.0685 area in Asian trading, just above its lowest level since early May.
The uncertainty over the French election results continued to weigh on EUR/USD, which heightened concerns that the new government will worsen the fiscal situation of the eurozone’s second-largest economy. In addition, the flash PMI data released last Friday showed that business activity growth in the eurozone slowed sharply in June. This, coupled with some follow-up buying in the US dollar, became a key factor exerting downward pressure on the EUR/USD pair.
The US dollar index (DXY), which tracks the US dollar against a basket of currencies, rose to its highest level since May 9, as the flash PMI data for June released last Friday showed that US business activity climbed to a 26-month high in June. The data supports the Fed’s patience, and despite signs of easing inflationary pressures, a September rate cut remains an open question. This could dampen aggressive bets by USD bulls and help limit further depreciation in EUR/USD.
Traders may also prefer to wait for the US Personal Consumption Expenditures (PCE) price index data due this Friday to get a sense of the Fed’s rate cut path. This will therefore play a key role in the near-term USD price dynamics and provide some notable momentum for EUR/USD. In the absence of any relevant macroeconomic data from the US, traders are now looking to the German IFO business climate index and speeches by influential Fed members for short-term trading opportunities.
