EUR/USD Forecast: Euro sellers take action as French political issues resurface
- EUR/USD trades deep in negative territory below 1.1700 on Monday.
- French PM Lacornu has resigned just weeks after his appointment.
- The technical outlook points to a buildup of bearish pressure in the short term.
EUR/USD stays under heavy bearish pressure in the European session on Monday and trades below 1.1700. In the absence of high-impact data releases, investors are likely to remain focused on political developments in the United States (US) and France.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.37% | 0.07% | 0.59% | -0.07% | -0.25% | -0.07% | 0.21% | |
| EUR | -0.37% | -0.41% | 0.14% | -0.47% | -0.63% | -0.48% | -0.20% | |
| GBP | -0.07% | 0.41% | 0.65% | -0.06% | -0.26% | -0.07% | 0.21% | |
| JPY | -0.59% | -0.14% | -0.65% | -0.59% | -0.87% | -0.71% | -0.41% | |
| CAD | 0.07% | 0.47% | 0.06% | 0.59% | -0.14% | -0.01% | 0.28% | |
| AUD | 0.25% | 0.63% | 0.26% | 0.87% | 0.14% | 0.19% | 0.47% | |
| NZD | 0.07% | 0.48% | 0.07% | 0.71% | 0.00% | -0.19% | 0.28% | |
| CHF | -0.21% | 0.20% | -0.21% | 0.41% | -0.28% | -0.47% | -0.28% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
News of French Prime Minister Sebastien Lecornu having resigned after taking that position just a few weeks ago triggered a Euro (EUR) selloff in the European session on Monday. France's CAC 40 Index is down about 2% following this headline, as markets grow increasingly concerned over a deepening political crisis in France.
Lecornu was reportedly facing mounting pressure from leftist lawmakers over his budget plans, per Reuters.
Meanwhile, the US government shutdown continues with no apparent progress toward a funding agreement in sight. Over the weekend, White House National Economic Council Director, Kevin Hassett, noted that layoffs could start if President Donald Trump decided that negotiations are "absolutely going nowhere."
In the absence of high-impact data releases, investors could refrain from placing themselves for a Euro recovery because of the political drama in France.
Later in the American session, European Central Bank (ECB) President Christine Lagarde will deliver a statement before the Committee on Economic and Monetary Affairs of the European Parliament.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart dropped below 40 and EUR/USD pierced through the 200-period Simple Moving Average (SMA), reflecting a buildup in bearish momentum.
On the downside, 1.1640 (Fibonacci 50% retracement of the latest uptrend) aligns as the first support level for EUR/USD ahead of 1.1580 (Fibonacci 61.8% retracement) and 1.1500 (round level, Fibonacci 78.6% retracement). Looking north, resistance levels could be spotted at 1.1700-1.1715 (Fibonacci 38.2% retracement, 200-period SMA) and 1.1750-1.1760 (100-period SMA, Fibonacci 23.6% retracement).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
