EUR/USD Rally Reverses as Political Uncertainty in the Eurozone Intensifies

The EUR/USD currency pair hit a bump in its rally from Friday last week as the US dollar demonstrated weakness after the release of the non-farm payroll report. The upcoming Dutch general election scheduled for Wednesday has heightened the political risk in the Eurozone as Geert Wilders, a far-right politician, is likely to win.

The currency pair had declined by over 50 points from its daily high due to the political uncertainty in Europe that has led to a decline in government bond yields across most European Union countries.

Currently, the political uncertainty in Europe is based on the likelihood that British Prime Minister, Theresa May, might trigger article 50 as early as Tuesday this week if her government’s Brexit bill passes. The upcoming general elections in the Netherland’s is seen as part of the populist movement in Europe that has seen leaders who want to take their countries out of the European Union gain popularity.

The currency pair’s positive performance earlier today was boosted by the weaker US dollar, which has been under pressure since the release of the NFP report on Friday last week.

The release of the German ZEW survey, which tracks market sentiment, slated for tomorrow, and Wednesday’s FOMC meeting where the Federal Reserve is expected to announce a rate hike will affect the currency pair’s future performance.

The EUR/USD was trading at 1.0677 as at 15:39 GMT having hit a daily high of 1.0714 before retracing its gains. The EUR/GBP was trading at 0.8718 having opened the day’s session trading at 0.8782.

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