Foreign exchange analyst Gary Howes believes that there is room for a rebound in the euro in the near future, but the rebound should not be significant as the euro may still face pressure before the French election.

After five consecutive weeks of decline, the euro has rebounded against the US dollar this week. Howes expects a consolidation of the euro against the US dollar in the near future, with resistance levels at the 100 day moving average and 1.08.

City Index analyst Fawad Razaqzada said, "The uncertainty of the French election and the rise of far right political parties in Europe, not to mention the recent rise in oil prices. All of these factors are suppressing the euro, making the short-term outlook for the euro against the US dollar bearish."

He added, "I wouldn't be surprised if the euro continues to fall against the US dollar in the short term due to the renewed weakness in Eurozone data and uncertainty in the French election."

Shaun Osborne, Chief Foreign Exchange Strategist at Scotiabank, stated that the sharp decline in the latter half of last week led the euro to test its key support level again at 1.0675, which is 76.4% of the rebound from April to June.

He pointed out that if it falls below this support, the euro against the US dollar will fall to 1.06, or even lower. The exchange rate may stabilize at least in the short term, but it needs to quickly rebound to 1.0750 to stabilize or improve.

Valentin Marinov, head of foreign exchange strategy at Credit Agricole, said that the euro would be nervous before the French election at the end of this month. It was expected that the euro would continue to bear pressure against the dollar, because the yield spread between the euro and German treasury bond continued to expand, especially if we saw evidence that this situation spread to other financially weak euro zone members.

The main data for this week is the core inflation data for May personal consumption expenditure (PCE) in the United States, which was released on Friday and is an important basis for the Federal Reserve's decision-making.

The market expects the Federal Reserve to cut interest rates later this year. If these expectations fade, the US dollar will strengthen. But the data must continue to exceed expectations.

Considering this, core personal consumption expenditure is expected to be 0.1% month on month and 2.6% year-on-year. The month on month expectation for the US dollar in May was 0.1%, lower than the previous 0.2. If the data exceeds expectations, it is expected that the US dollar will end at a high level this week, while the Eurodollar may end at a low level not seen since mid April (1.06).

Marinov said, "In the coming months, the factors driving the exchange rate trend may still be negative, pushing the euro/dollar back to 1.05."

EUR/USD daily chart