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 The euro remained under pressure ahead of the French snap election and following more signs of weakness for German’s economy. In response, the US dollar strengthened further, leading to a fresh multi-decade high for USD/JPY above April’s peak. The EUR/USD fell below 1.07 handle to test an important support zone between 1.0650-1.0680 area. So, what’s next for this popular trading pair?
 More signs of weakness for German economyRecent data from Germany indicates that the economic recovery from last year’s downturn is slowing, potentially prompting the ECB to cut interest rates again. Today saw the GFK consumer confidence index unexpectedly fall to -21.6 in June, down from a revised -21 in May, and contrary to expectations of a slight improvement to -18.9. This follows a weaker-than-expected German business climate index and disappointing PMI data from the end of last week.The ECB cut rates by 25 basis points in June but hesitated to commit to another rate cut due to concerns about a strong labour market and high wage growth. However, a weakening German economy and signs of a stagnating recovery may prompt the ECB to act again in the coming months.
 What are the next big macro events for EUR/USD?One big risk event is taking place this Sunday, on June 30. This will mark the first round of the French parliamentary election. But it is likely that the extent of Marine Le Pen party’s progress will only be known after the run-offs on July 7. This political uncertainty, should keep the EUR/USD under pressure or at least limit the upside potential, keeping the dollar index supported. The single currency has remained under pressure with the latest polls continuing to show Marine Le Pen’s far-right RN party remaining in the lead. Meanwhile, in the US, we will have a few important data releases too, starting with the May core PCE inflation figures this Friday, followed by the June non-farm jobs report next Friday, July 5, and the month’s CPI report on July 11.
 US dollar likely to remain supported for nowIn recent weeks, the US dollar has become the preferred hedge against political uncertainty in Europe. This has been especially the case given that both the Swiss franc and Japanese yen, traditional safe haven currencies, have fallen out of favour because of looser monetary policies in Switzerland and especially Japan. Last week, the SNB surprised the market with a rate cut and this has effectively strengthened the US dollar against the euro. In short, the EUR/USD’s near-term direction is far from certain amid political uncertainty in France and the rise of far-right parties across Europe.
 Key US data to watchThis week’s key US economic calendar highlights include the latest Core PCE index, due on Friday. Ahead of it, we will have new home sales data later today, followed by pending home sales, jobless claims, durable goods orders and final Q1 GDP estimate all on Thursday.On Friday, we saw the release of stronger-than-expected PMI data from the US, while existing home sales also beat. This further aided the dollar rally, causing the USD/JPY to break today its multi-decade high of 160.21 hit in April. The EUR/USD has since remained under pressure, and the single currency is likely to remain a laggard in any USD-negative scenarios this week ahead of the French elections. Investors expecting a weaker US dollar should focus on another currency pair.Looking beyond the near-term election uncertainty in Europe, the US dollar could initiate a more substantial move once the market become confident enough that the Fed will start an easing cycle. This puts the upcoming PCE data into sharp focus, which will be followed next week by the June non-farm jobs report, on July 5, and the month’s CPI report on July 11.The timing of the first Fed rate cut has been highly volatile this year. Initially expected in June, stronger data releases pushed expectations to December. Recently, a few disappointing data points have shifted expectations to September. The Core PCE data, the Fed’s preferred measure of inflation, is crucial this week. Following weaker CPI and PPI reports, another weaker-than-expected inflation report could cause the dollar to start heading lower again.
 EUR/USD technical levels to watch The EUR/USD is bouncing around between short-term levels, without making any progress in any direction. The pair has moved below the key moving averages like the 200-day MA and broken a few support levels like 1.0790 and 1.0750 recently, which is not a strong sign by any means. So, the overall trend is bearish until the charts tell us otherwise. Support at 1.0680 was being tested at the time of writing. If this level fails to hold, then we may see the onset of a move towards the April low near 1.06 handle next.More By This Author:Silver’s bullish consolidation not to be confused as sign of weakness GBP/USD Faces Testing Week With UK CPI, BoE And PMIs All On Tap Gold’s Bullish Outlook Unaffected Despite Recent Volatility