The EUR/USD pair edged back above 1.1670 in early U.S. trading on Monday, after plunging earlier in the session to nearly one-month lows at 1.1645. The drop came in response to escalating political uncertainty in France following the sudden resignation of Prime Minister Sébastien Lecornu.
Political Crisis in France Pressures the Euro
France was thrust into political crisis on Monday as Prime Minister Lecornu resigned, just hours after the announcement of a new government. His departure marks the fifth resignation under President Emmanuel Macron’s second term, raising serious concerns about political stability and the credibility of the French presidency.
With France being the Eurozone’s second-largest economy, fears of snap elections and potential gains for populist parties have triggered a broad sell-off in the Euro across global markets.
U.S. Developments: Shutdown and Rate Cut Expectations
In the U.S., the federal government shutdown has entered its second week, with no breakthrough in Senate funding talks over the weekend. President Donald Trump has threatened mass layoffs of federal workers if negotiations continue to stall — adding another layer of risk sentiment to markets.
Despite mixed signals from Federal Reserve officials last week, markets are still pricing in aggressive Fed easing. According to the CME FedWatch Tool, there’s a 95.7% chance of a 25 basis-point rate cut in October, and an 84% chance of another in December — limiting upside for the U.S. Dollar.
Eurozone Data: Retail Sales Meet Expectations
Eurozone Retail Sales rose 0.1% in September, in line with forecasts, following a 0.4% decline in August. Year-over-year growth slowed to 1%, down from 2.1% in July. While not a market mover, the data suggests only modest consumer activity heading into Q4.
Currency Performance Snapshot
The Euro was weaker against most major currencies on Monday, particularly the U.S. Dollar, British Pound, and Australian Dollar, but managed a slight gain against the Japanese Yen following Japan’s shift towards a more dovish fiscal outlook under new Prime Minister Sanae Takaichi.
Daily Performance – Euro vs Majors:
| Pair | % Change (EUR base) |
|---|---|
| EUR/USD | -0.41% |
| EUR/GBP | -0.38% |
| EUR/JPY | +0.07% |
| EUR/CAD | -0.44% |
| EUR/AUD | -0.63% |
| EUR/NZD | -0.44% |
| EUR/CHF | -0.23% |
Technical Analysis: EUR/USD Under Heavy Pressure
EUR/USD faces significant selling pressure, with bears now targeting the key support zone at 1.1645, last seen in late September. Momentum indicators point to further downside:
- 4H RSI is deep in bearish territory, indicating strong downward momentum.
- MACD has crossed below its signal line, confirming the bearish bias.
Key Support Levels:
- 1.1645 – September low
- 1.1610 – September 2–3 lows
- 1.1575 – August 22 and 27 lows
Resistance Levels:
- 1.1685 – Former support, now immediate resistance
- 1.1730 – Daily high
- 1.1760–1.1770 – Last week’s high zone
A sustained drop below 1.1645 could open the door for deeper declines in the days ahead, especially if French political uncertainty intensifies.
Outlook
The Euro remains vulnerable amid heightened political risk in France and lackluster economic data. While expectations for Fed rate cuts may cap gains in the U.S. Dollar, the EUR/USD pair could remain under pressure in the short term unless Eurozone political stability improves.