The Euro (EUR) remains under pressure on Thursday, with the EUR/USD pair dipping below 1.1620, inching closer to key support at 1.1600. Efforts to rebound have been capped around 1.1650, as the market remains cautious due to political instability in France and anticipation over comments from the US Federal Reserve.
Political Tensions in France Weigh on the Euro
Investors remain wary of developments in France, where political uncertainty continues to cloud sentiment. Outgoing Prime Minister Sébastien Lecornu attempted to ease market concerns, stating President Emmanuel Macron would name a new Prime Minister within 48 hours. Lecornu also dismissed opposition calls for snap elections, citing the lack of a parliamentary majority.
Despite his reassurance, markets remain unconvinced about France’s ability to address its growing fiscal challenges, adding downward pressure on the Euro.
Fed in Focus Amid US Government Shutdown
In the US, the government shutdown has entered its eighth day, leading to delays in major economic data releases. As a result, traders are turning their attention to the Federal Reserve for direction.
Minutes from the Fed’s September policy meeting, released Wednesday, revealed ongoing internal debate over the pace and scale of monetary easing. While employment is weakening, inflation risks remain elevated, complicating the outlook.
Later today, Fed Chair Jerome Powell and other policymakers are expected to speak, although their comments may not shift the current market expectation of two rate cuts by year-end.
EUR/USD Market Mood: Some Respite, But Pressure Persists
A slightly improved market mood on Thursday offered temporary support to the Euro. However, the overall trend remains bearish. The Eurozone’s largest economy continues to struggle, as highlighted by:
- Germany’s trade surplus rising to EUR 17.2 billion in August—driven by falling imports (-1.3%) rather than strong exports (-0.5%).
- A 4.3% drop in German industrial production in August, confirming weak economic momentum.
Meanwhile, geopolitical sentiment has slightly improved following a ceasefire agreement between Israel and Hamas, contributing to a modest uptick in global risk appetite.
Technical Outlook: Bearish Trend Intact for EUR/USD
EUR/USD remains under pressure as sellers reject attempts to rise above 1.1650, keeping the downtrend intact. The Relative Strength Index (RSI) stays below 50, signaling sustained bearish momentum.
- Key support levels:
- 1.1600: Immediate psychological and technical support
- 1.1575: August 22 & 27 lows
- 1.1530: August 5 low (less likely in the near term)
- Resistance levels:
- 1.1645–1.1650: Recent rejection zone
- 1.1720: Descending trendline resistance
- 1.1765–1.1775: Last week’s highs, potential target if trend reverses
Euro Performance Snapshot
As of Thursday, the Euro is mixed but strongest against the New Zealand Dollar (NZD) and weakest against the Australian Dollar (AUD).
| Base / Quote | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| EUR | -0.09% | — | +0.10% | -0.05% | -0.13% | -0.20% | +0.11% | -0.23% |