Euro underperforms as France fiscal risks mount

Euro faces intense selling pressure against its peers as French fiscal worries mount.
France vows to reduce its budget deficit to the European Union limit of 3% by 2029.
Inflation data of September from both the Eurozone and Japan has come in hotter-than-projected.

Sagar Dua FXStreet

The Euro (EUR) trades lower against its major currency peers due to mounting fiscal worries in France. In the European trade, the major currency is down 0.35% at around 177.00 against the Japanese Yen (JPY).

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.13%	-0.07%	-0.24%	0.15%	-0.05%	-0.04%	-0.29%
EUR	-0.13%		-0.19%	-0.37%	0.00%	-0.15%	-0.15%	-0.41%
GBP	0.07%	0.19%		-0.17%	0.23%	0.03%	0.04%	-0.21%
JPY	0.24%	0.37%	0.17%		0.39%	0.18%	0.19%	-0.05%
CAD	-0.15%	-0.00%	-0.23%	-0.39%		-0.22%	-0.21%	-0.45%
AUD	0.05%	0.15%	-0.03%	-0.18%	0.22%		0.00%	-0.23%
NZD	0.04%	0.15%	-0.04%	-0.19%	0.21%	-0.01%		-0.23%
CHF	0.29%	0.41%	0.21%	0.05%	0.45%	0.23%	0.23%

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).

The Euro is under pressure as bond yields in France have rallied to the highest since 2002 at 4.96% due to mounting fiscal worries. A report from Associated Press (AP) showed that the public debt in France now stands at 119% of Gross Domestic Product (GDP).

France aims to reduce its budget deficit from a target of 5% of economic output next year to the European Union limit of 3% by 2029. France’s Finance Minister (FM) Roland Lescure also presented the country’s 2027 budget bill on Thursday, stating that the plan will put public finances back on track for budget consolidation, Reuters report.

However, market experts doubt that the minority government in France would be able pass the budget at Parliament without concessions.

Brown Brothers Harriman’s (BBH) Elias Haddad highlights mounting fiscal challenges in France, signaling caution that they “doubt the proposal will clear parliament without significant concessions,” underscoring the political hurdles to meaningful consolidation.

Even if a compromise is reached, BBH points out that France’s fiscal watchdog has warned the economic assumptions embedded in the “2027 draft budget are ‘optimistic’,” raising questions over the credibility of the medium-term path. Against this backdrop, the bank argues that “a rollover of the 2026 budget is the most likely outcome given the limited appetite for compromise before the presidential election on April 18, 2027.”

BBH estimates that such an outcome “could push the deficit from 5.4% of GDP in 2026 to roughly 6.0% in 2027,” a deterioration that would take France “further away from its European Commission commitment to bring it below 3% by 2029.”

On the economic front, preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for September has come in stronger-than-expected. The headline HICP arrives at 3.8% Year-on-year (YoY), higher than 3.6% estimates and the August reading of 3.2%.

In Japan, Tokyo’s Consumer Price Index (CPI) data for September also came in hotter-than-expected. Tokyo CPI ex. Fresh Food rose by 2.7% Year-on-Year (YoY), faster than 2.4% estimates and the previous reading of 1.8%. The headline inflation accelerates to 2.7% from 1.9% in August.

Economic Indicator

Harmonized Index of Consumer Prices (YoY)

The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

AUD/USD bounces back toward 0.6950 on fresh USD supply

AUD/USD bounces back toward 0.6950 in the Asian session on Friday. The US Dollar retreats from 17-month highs as traders take profits off the table ahead of the all-important US Nonfarm Payrolls report. Meanwhile, the Australian Dollar draws support from reviving expectations of a November interest rate hike amid elevated global yields and inflation risks.

USD/JPY struggles near 158.00 as USD retreats ahead of NFP

USD/JPY is struggling for fresh impetus near 158.00, moving away from the top end of its weekly range in the Asian session on Friday, after hotter-than-expected Tokyo CPI and amid a broad US Dollar retreat. Traders reposition themselves ahead of US Nonfarm Payrolls.

Gold remains capped below $4,200 as traders await US NFP for Fed rate cuts

Gold extends its sideways move on Friday, trading below the $4,200 mark heading into the European session as traders await the release of US employment details. The US Nonfarm Payrolls report is expected to show that the economy added only 90K jobs in September, down from the previous month's reading of 162K.

Pi Network retreats to key support level as selling pressure resurfaces

Pi Network price remains volatile in the near term, hovering around $0.0900 at press time on Friday after losing over 3% the previous day. The pullback warns of a steeper correction, with a risk of breaking below a rising wedge pattern on the four-hour chart. Pi Network struggles to maintain a steady recovery as the price remains capped below the $0.1000 psychological barrier.

US Nonfarm Payrolls expected to soften in September

The United States Bureau of Labor Statistics is set to release September Nonfarm Payrolls (NFP) data on Friday at 12:30 GMT. Investors expect NFP to rise by 90K in September following August’s impressive 162K increase. The Unemployment Rate is seen holding steady at 4.1%, while the monthly wage inflation, as measured by the change in Average Hourly Earnings, is projected to hold steady at 0.3%.

Markets are pricing a Fed pause. The jobs data says the hike is still coming

The market has rapidly changed its mind about the Federal Reserve (Fed). Only a week ago, investors saw an October interest-rate hike as the most likely outcome. However, softer inflation and cautious comments from policymakers have since turned a pause into the dominant scenario. Yet beneath that dramatic repricing, the US economy is sending a considerably less dovish message.