EUR/USD is drawing some support even as French sovereign spreads widen, with markets tracking the revenue vote in the lower house on the proposed 2027 budget. Amendments from both left and right risk diluting the package, and the working assumption is a bill shuttling between the lower and upper chambers into early December. Attention is also on a Moody’s rating review on Friday, where France could be cut to a single A-rated issuer, potentially losing its final AA grade among the big three agencies. Positioning is described as underweight French debt, while expectations for forced selling remain limited.
Market Dynamics and Fiscal Developments
After a steep fall in September, the pair is seen needing consolidation rather than a clear trend, with 1.1180 viewed as as plausible as a rally to 1.1270. Eurozone business optimism has so far stayed resilient despite French fiscal strain and high energy prices, but the next tests are the German ZEW index release today and Friday’s flash PMIs for the region. The data are expected to edge lower, though without necessarily derailing the euro.
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