EUR/USD pulls back near 1.1710 on French fiscal headwinds – BBH

FXStreet Insights Team FXStreet

EUR/USD softened to 1.1710 after French PM Lecornu confirmed that Parliament will miss year-end budget approval, forcing a special rollover law. Despite this fiscal setback, the European Central Bank’s (ECB) hold on rates at 2.00% and upward revisions to growth and 2026 inflation underpin the euro, with rising wage pressures adding to the currency’s support, BBH FX analysts report.

Eurozone growth upgraded, inflation pressures remain sticky

"EUR/USD is trading heavy near 1.1710 after testing an intra-day high of 1.1763 yesterday. French Prime Minister Sebastien Lecornu confirmed the inevitable; Parliament will not be able to pass a budget before the end of the year. As a result, the government will start the process of filing a 'Special Law' bill that allows it functionally to roll over the 2025 budget into next year. France’s failure to repair public finances can lead to further bouts of fiscal stress and is a headwind for EUR."

"Otherwise, ECB/Fed policy stance continues to underpin the uptrend in EUR/USD. As was widely expected, the ECB left the policy rate unchanged at 2.00% for a fourth consecutive meeting."

"The ECB’s updated macroeconomic projections reinforce the case that the bank is in a good place to keep rates on hold for some time and that the next move is a hike. Eurozone economic growth is expected to be stronger than in the September projections and inflation has been revised up for 2026 due to stickier services inflation. Indeed, the ECB’s Q3 negotiated wage tracker released today points to rising wage pressures."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD keeps the bid tone above 1.1800

EUR/USD found its footing on turnaround Tuesday, regaining momentum and pushing back above the 1.1800 mark. The move reflects a softer US Dollar as investors position ahead of upcoming US data and continue to reassess what the Fed’s rate path might look like from here.

GBP/USD flirts with daily highs near 1.1700

GBP/USD is trying to claw back some of the ground lost over the past couple of sessions, posting solid gains and pushing up towards the 1.3700 area. Cable’s bounce comes as the Greenback eases modestly, while attention now turns to the BoE’s event on Thursday.

Gold nears $5,000 on lingering political woes

Gold has rebounded sharply, snapping a three-day sell-off and turning its focus back to the key $5,000 mark per troy ounce on Tuesday. The precious metal’s bounce appears to be driven by bargain-hunting alongside fresh selling pressure on the US Dollar and mixed US Treasury yields.

Hyperliquid rallies as HIP-4 proposal supports prediction market

Hyperliquid (HYPE) extended its recovery by 8% at press time on Tuesday, driven by the HIP-4 proposal to add outcome trading, referring to prediction markets and bounded options contracts.

Japan’s snap elections: The fiscal credibility test and the market playbook

Japan has opted for a snap election on 8 February 2026 rather than waiting for the normal electoral calendar, which makes this a faster, higher-stakes reset of political mandate.

Ripple slides as low retail, institutional demand weigh

Ripple edges lower, trading marginally below $1.60 at the time of writing on Tuesday as bulls and bears battle for control. The cross-border remittance token rose to $1.66 on Monday, but profit-taking and risk-off sentiment in the broader crypto market led to the ongoing correction.