• EUR/USD weakens to 1.0750 on Monday amid multiple headwinds.
• Euro tumbles as French President Emmanuel Macron calls for a snap election, which triggers political uncertainty.
• Strong US labor market data diminishes Fed rate-cut bets, which boosts the US Dollar’s appeal.

EUR/USD extends its decline to 1.0750 on Monday. The major currency pair weakens as political uncertainty in the Eurozone after French President Emmanuel Macron call for a snap election weighed heavily on the Euro. Macron’s unexpected move on Sunday evening came after exit polls indicated that Marine Le Pen’s far-right National Rally (RN) scored 32%-33% seats in European parliamentary elections under the leadership of the party’s president, Jordan Bardella, which was more than double from Macron’s centrist’s list.

After the dramatic announcement of a snap election, Macron added: “I have confidence in our democracy, in letting the sovereign people have their say. I’ve heard your message, your concerns, and I won’t leave them unanswered”, The Guardian reported. However, there could be potential consequences if Macron’s party faces more losses than forecasted by exit polls, which could deepen uncertainty over the Euro’s outlook.

On the monetary policy front, European Central Bank (ECB) policymaker and President of the Deutsche Bundesbank Joachim Nagel warned about a stubborn inflation outlook, especially in the service sector, due to strong wage growth. Worries about inflation becoming sticky suggest that the policy-easing campaign would be slow. 

ECB President Christine Lagarde already said in the monetary policy press conference after cutting the central bank’s Deposit Facility Rate by 25 basis points (bps) to 3.75% that the bank is not committing to any specific interest-rate path and will remain data-dependent as inflation could remain bumpy in next few months