Investing.com – Bearish euro sentiment is back, according to Bank of America Securities, in the wake of the European Parliament elections and the surge in political risk.

At 08:25 ET (12:25 GMT), traded 0.3% lower at $1.0730, with the pair well over a full percentage point lower over the course of the last week.

The European Parliament elections, which concluded over the weekend, saw sharp moves to the right in a number of countries, most prominently in France. 

This prompted French president Emmanuel Macron to call a shock snap legislative election on Monday, a move which amounts to a roll of the dice on his political future, potentially handing major political power to the far-right party of Marine Le Pen.

Ratings agency Moody’s (NYSE:) issued a credit warning after the event.

“This snap election increases risks to fiscal consolidation,” Moody’s said in a statement late on Monday, describing it as “credit negative” for the country’s Aa2 rating.

The EUR/USD pair looked to be breaking above 1.09 and escaping the year-to-date downtrend just last week, analysts at BoA Securities said, in  a note dated June 10. 

However, EU political turmoil (along with a strong U.S. jobs number) brought EUR/USD back to a 1.07-handle to start this week. 

“On the back of these catalysts, the bearish sentiment is now broadening out to several EUR-pairs. Event analysis shows bearish continuation signal for EUR/USD as EUR put skew sharply widened by 4% over the weekend,” said BoA.

“Positioning analysis shows broad EUR downtrend signals vs GBP, JPY and SEK.”