Investing.com – The U.S. dollar fell slightly on Friday, while the euro also fell, heading for a edged weekly loss amid political turmoil in the region.

At 04:20 ET (08:20 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading 0.1% lower at 105.125.

The edges of the dollar lower

Despite these compact losses, the dollar is on track for modest gains this week after leaving the funds rate unchanged at 5.25%-5.5% but limiting the number of cuts expected for this year to just one from three in March.

That said, these gains are narrow after both U.S. prices and prices were weaker than expected, suggesting inflation pressures are easing while jobless benefits rose to a 10-month high last week.

Even though the June Fed scatter chart shows the median projection of only one rate cut in 2024, Goldman Sachs still expects the first rate cut in September and the second in December.

“Our 2024 inflation forecast is currently slightly below the FOMC forecast, which Chairman Powell described as “fairly conservative.” With two better rounds of inflation data now available, we believe that if the next three rounds are in a similar range, leaders are likely to push through a cut in September,” the US bank added.

The euro is weakening as a result of political turmoil

fell 0.3% to 1.0708, on track to post weekly losses of around 0.8%, with the European region mired in political turmoil following gains by far-right parties in the European Parliament elections that ended on Sunday.

French President Emmanuel Macron, in response to the losses suffered by the right-wing Front National party led by Marie Le Pen, called for early elections in France.

“It seems that today, at the beginning of Europe, the euro is losing another leg with the news that French left-wing parties are joining forces to form a coalition and field only one candidate from each district,” ING analysts said in a note. “This rare cooperation of the left may further drain support from President Macron’s party.”

in France rose by 2.6% year-on-year in May, slightly revising downwards its flash reading of 2.7% growth published at the end of May.

EU-harmonized year-on-year growth in the bloc’s second-largest economy accelerated in May compared with the April reading of 2.4%.

fell 0.2% to 1.2729, trending toward modest gains this week, after stronger-than-expected UK inflation data last month prompted investors to shift their assumptions on the start date of BoE rate cuts at the end of 2024.

The May publication for the UK will be released next week, as will the next Bank of England publication.

Yen weakens after BOJ meeting

In Asia, quotations rose 0.3% to 157.56 after markets were disappointed with plans to tighten policy.

The BOJ kept interest rates steady and said it would only provide clear signals on its plans to start tapering bond purchases at its July meeting and that it was meeting with market participants to get more information in the meantime.

gained 0.1% to 7.2557, hitting its highest level in almost seven months, with sentiment towards China weakened by the EU’s imposition of high tariffs on imports of electric vehicles from China.