Rates to remain on hold

UR/USD aims to gain ground near the crucial support of 1.0700 in Monday’s New York session. The major currency pair finds cushion as European Central Bank (ECB) Chief Economist Philip Lane emphasizes maintaining interest rates at their current levels in coming months. Lane added that he wants to see disinflation in the service sector for more than a month as needed for easing policy further.  

ECB policymakers have been reluctant to provide an interest rate-cut trajectory as they remain concerned over the stubborn wage growth outlook, which could revamp price pressures again. On Sunday, ECB Governing Council member and Governor of the Bank of Latvia Martins Kazaks said that the bank must not allow inflation to remain above 2% into 2026. Kazaks added, “Currently, I think we are still on the path to 2% in the second half of 2025, and I really hope that we will do it by that time.” 

Earlier, the shared currency pair remained under pressure as potential risks of the financial crisis in France amid firm speculation that Marine Le Pen's far-right National Rally (RN) will form a new government, which will have an adverse impact on the nation’s fiscal situation, that has dampened Euro’s appeal. 

French Finance Minister Bruno Le Maire said on Friday that the euro zone's second-biggest economy was at risk of a financial crisis if either the far right or left won because of their heavy spending plans, Reuters reported.On the monetary policy front,