Dollar finds strength as Euro and Pound drop

The US Dollar index has surged recently as the likelihood of a second Donald Trump presidency has increased. This boost follows President Joe Biden's weak debate performance last week and the Supreme Court's ruling on Monday, which granted Trump some immunity from prosecution regarding his attempts to overturn the 2020 election results.

The minutes from the Fed's June meeting will be released on Wednesday, followed by June's nonfarm payrolls data on Friday. These reports are expected to provide crucial insights into the labor market, a significant factor for the Fed when considering interest rate cuts. Economists anticipate the U.S. economy added 189,000 jobs in June, following a stronger-than-expected increase of 272,000 jobs in May

The EUR/USD declined by 0.2% to 1.0716, ahead of the upcoming release of June inflation data for the eurozone later in the session. The headline figure is projected to increase by 2.5% annually, down from 2.6% in May. Meanwhile, the core rate, excluding volatile food and energy prices, is expected to rise by 2.8% annually in June, a slight decrease from 2.9%.

ECB President Christine Lagarde will speak today at the central bank's annual meeting in Portugal, potentially influencing future interest rate expectations.

Politics will stay in the spotlight this week after the far-right National Rally won the first round of the French parliamentary elections on Sunday. The likelihood of the eurosceptic, anti-immigrant RN securing power next weekend remains uncertain and will hinge on the political dealmaking by its rivals in the coming days.

The GBP/USD also declined by 0.2% to 1.2627, amidst the upcoming U.K. general election on Thursday, where the opposition Labour Party is widely anticipated to regain power. Such an outcome could lead to a return to stability following significant political turbulence during the Conservatives' 14-year rule, potentially giving support to Sterling.

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