The euro fell in European trading on Monday against a basket of major global currencies, resuming its decline after Fridays brief rebound against the US dollar. The single currency is now heading toward a two-month low, weighed down by fresh political developments in France, the euro areas second-largest economy.

The French presidency announced the formation of a new government led by Sbastien Lecornu, with President Emmanuel Macron reappointing one of his closest allies, Roland Lescure, as finance minister.

With inflationary pressures once again building across the eurozone, expectations for further interest rate cuts by the European Central Bank have diminished for the remainder of this year. To reassess those expectations, investors are awaiting additional economic data and remarks from ECB officials.

Price Overview

Euro exchange rate today: The euro fell by more than 0.2% against the dollar to 1.1592, down from the opening level of 1.1618$, after reaching a session high of 1.1630.

On Friday, the euro rose 0.5% against the dollar its first gain in five days recovering from a two-month low of 1.1542.

Last week, the euro lost 1.0% against the dollar its second weekly decline in three weeks and the sharpest drop since late July amid the ongoing political crisis in France.

US Dollar

The US dollar index rose around 0.3% on Monday, resuming gains after a brief pause in the previous session and moving closer to a two-month high, reflecting continued strength of the greenback against a basket of major and minor currencies.

This advance came after US President Donald Trump signaled openness to dialogue with China to resolve trade disputes between the worlds two largest economies, easing concerns following his earlier threats to impose tariffs of up to 100% on Chinese imports.

Political Developments in France

Over the weekend, the French presidency announced the new government lineup under Prime Minister Sbastien Lecornu, with President Macron reinstating Roland Lescure one of his closest allies as finance minister.

The appointment came amid a deep political crisis after Lecornus previous government resigned just hours after being formed, leaving a vacuum and heightened political tension in Paris.

The main priority for the new French government is to address the budget crisis and push through the national spending bill a move seen by observers as an attempt to calm markets and build a negotiating bridge with various parliamentary blocs.

However, the decision to name Lescure, a staunch Macron ally, as finance minister has cast doubts over the governments longevity. Opposition parties have already threatened to bring down the cabinet quickly if it fails to distance itself from Macrons earlier policies.

European Interest Rates

Money-market pricing currently implies less than a 10% chance of a 25-basis-point ECB rate cut in October.

Traders have scaled back bets on further monetary easing, signaling that the current rate-cut cycle is effectively over for this year.

Policymakers at the European Central Bank believe no additional rate cuts are needed to achieve the 2% inflation target, despite new forecasts pointing to lower rates over the next two years.

Sources indicate that unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.

Investors are now awaiting fresh economic data across Europe and closely monitoring comments from ECB officials to reassess policy expectations.