LONDON (Reuters) – The euro dipped on Tuesday as investors nervous about trade tensions bought into the safe-haven dollar and fretted that political risks in Europe remain high, even though pro-Europe parties won a majority of European parliamentary seats.
Remarks by two euro zone officials that the European Commission was likely to fine Italy on June 5, because its rising debt and structural deficits break European Union rules, also weighed on the single currency.
Pro-Europe parties kept a majority of seats in last week’s European parliamentary elections. Support grew for eurosceptic and right-wing parties, but not as much as investors had feared.
European leaders now meet in Brussels to fill in a number of top EU posts, from the head of the European Commission to the European Central Bank.
Currency markets remain in tight ranges without new catalysts and amid uncertainty over how trade tensions between the United States and China are affecting the world’s major economies.
“Until there is more clarity on the external trade story or perhaps the Fed engineers a weaker dollar, expect EUR/USD to stay pressured,” ING analysts said in a note.
The euro slipped 0.1% to $1.1179. The single currency’s initial gains after the EU election results were fleeting.
The dollar rose 0.2% against a basket of peers, its index touching 97.791. It remains off a two-year high of 98.371 hit on Thursday.
The yen rose 0.3% to 109.26 yen. U.S. President Donald Trump, who is visiting Japan, is expected to put pressure on Tokyo to reduce the nation’s large trade surplus with the United States.
Trump said on Monday he expected the two countries to be “announcing some things, probably in August, that will be very good for both countries” on trade.
Elsewhere, the Australian dollar gained to $0.6923, about 0.75% above Thursday’s four-month low.
The Swedish crown rallied 0.3% to 10.689 crowns per euro despite deteriorating consumer and manufacturing sentiment, as Swedish inflation was also seen to be rising in 12 months from previous expectations.
Sterling slipped 0.1% to $1.2671 as candidates to succeed British Prime Minister Theresa May laid out some of their Brexit plans.
“The pound fell most notably yesterday and the strong showing by the Brexit Party has fueled speculation of a shift toward a Hard Brexit departure from the EU on 31st October,” MUFG analysts said, referring to the Brexit Party topping the polls in Britain at the European parliamentary election.
Bitcoin, the world’s biggest cryptocurrency, stabilized after another jump higher over the weekend to one-year highs.
The price of Bitcoin stood at $8,720 after hitting as high as $8,939. The virtual currency has rocketed 136% so far in 2019.