Latest polls show Marine Le Pen’s far-right RN party remains in the lead (35%) ahead of Sunday’s first round parliamentary vote, followed by left-wing NPF party (29%) and President Emmanuel Macron’s centrist coalition (19%), ING’s FX Strategist Francesco Pesole notes.

Euro unlikely to find support amid political uncertainty

“We continue to keep a close eye on the EUR/USD risk premium. As of Friday’s close, that amounted to 0.9% in our estimates, well below the 2.4% 14 June peak and also below the 1.8%. We see risks skewed to the downside for EUR/USD before the Friday-Sunday events in the US and the EU.”

“Today, the German IFO survey will add information on how much political uncertainty has spread to German business confidence following soft PMIs last week. On Friday, CPI figures for France, Spain and Italy will start directing expectations, but the proximity to the French vote means any upside surprises may still struggle to feed into a stronger EUR.”

“EUR/USD may find more sellers below 1.0700 in the coming days on the back of political risk. Should US PCE offer no support to the pair, the 1.0600 April lows will be at reach. Another pair to watch this week is EUR/SEK, which has paused its big downward trend ahead of the Riksbank announcement on Thursday.”