Brown Brothers Harriman's (BBH) Elias Haddad highlights that France's deteriorating public finances are driving a sharp widening in French-German spreads, with the premium already near past crisis highs. Using Italy's 2018 budget turmoil as a template, Haddad warns that further spread widening could pressure EUR/USD toward 1.1000, while noting that France's 2027 presidential election may eventually restore confidence if credible deficit reduction is delivered.
The Euro is still hovering around the downtrend resistance line as more pressure still affects the market. As long as prices hold below the resistance of 1.1240-80 the drop pressure could continue towards the target and support of 1.1065, which in turn could lead to a correction.
French bond yields are testing levels last seen in 2002, while momentum approaches overbought conditions last seen in 2022. French political and debt uncertainty are contributing to the move.
Chris Turner at ING highlights that EUR/USD is holding up despite higher energy prices and French budget risks, helped by unwinding of heavy US tech and Dollar positions. He sees Fed tightening expectations remaining firm and the Dollar strong in coming months.
United Overseas Bank (UOB) strategists Quek Ser Leang and Lee Sue Ann report EUR/USD remains stuck in a tight consolidation, with intraday trade expected between 1.1210 and 1.1250 as momentum indicators stay flat. Over the next one to three weeks they see a narrower 1.1170–1.1270 band containing price action.
The EUR/USD pair trades in positive territory near 1.1245 during the early European trading hours on Thursday. Nonetheless, the potential upside might be limited amid fiscal concerns in France.
The Dollar Index is expected to hold above 101.50 and recover toward 102+, while EURUSD may extend toward 1.1250–1.13 before its longer-term downtrend resumes.
Based on Arc Cycle Analysis applied to the 4h chart, Euro/U.S. Dollar has rebounded from the 1 (100%) Support Arc within the current Arc Cycle. The rebound confirms a bullish reaction and opens the potential for continued movement higher, toward 1.1258.
EUR/USD is attempting to build on last week's sharp recovery, but the initial rebound has lost momentum as buyers confront the next major technical hurdle. The near-term structure has improved, although the broader decline from the August highs continues to weigh on the outlook, leaving the bulls with more work to do before a durable reversal can be confirmed.
Euro: France risks and ECB expectations keep EUR/USD steady – Commerzbank
EUR/USD Price Forecast: Loses ground below 1.1250, bearish technical prevails below 100-day SMA