Both politics and monetary policy will need to be pondered in the first part of the summer, ING’s FX Strategist Francesco Pesole notes.

The US Dollar is the current favorite hedge for political uncertainty

"The US Dollar (USD) has emerged as the favorite hedge for political uncertainty. If the US May core PCE on Friday does come in at the consensus 0.1% month-on-month, the short-term downside for the USD against European currencies may be less pronounced as markets could still favor defensive positions ahead of the French vote on Sunday."

"When taking EU political noise out of the equation, though, PCE data should in our view feed into an increasingly dovish Federal Reserve narrative this summer, culminating with a September rate cut. This is why we remain generally bearish on the USD for the end of next quarter."

"Today, the only US data release is the Dallas Fed manufacturing index, while three Fed speakers will deliver remarks: Christopher Waller, Austan Goolsbee and Mary Daly. We think DXY can trade above 106.0 and potentially test the 106.50 May high into the events at the back-end of this week."