The Euro received support following positive political developments in France. <\/p>\n
EUR\/USD may potentially find strong support at 1.160 if certain conditions are met. France’s Prime Minister S\u00e9bastien Lecornu has delayed pension reforms, addressing a demand from the Socialist Party.<\/p>\n
The Socialist Party’s backing reduces the likelihood of a no-confidence vote to be successful. With their support, chances have improved for passing a budget, despite tight parliamentary numbers.<\/p>\n
The draft budget aims to reduce the deficit from 5.4% to 4.7% this year, though the pension freeze could affect market confidence in long-term fiscal commitments.<\/p>\n
The 10-year OAT-Bund spread is now below 80 basis points, its narrowest in a month, making the euro appear less vulnerable.<\/p>\n
If Lecornu survives the no-confidence vote, the EUR\/USD may rise and potentially establish strong support around 1.160.<\/p>\n
With French Prime Minister Lecornu surviving the no-confidence vote this morning, the immediate political risk has faded, lending support to the Euro. We are seeing EUR\/USD firming up around the 1.1600 level, which could become a solid base in the near term. This stability is a welcome change after the uncertainty we saw in late September 2025.<\/p>\n
The easing of political tension is quantifiable in the bond market, where the 10-year OAT-Bund spread is now trading at 77 basis points, its tightest in over a month. This sentiment is also seen in the derivatives market, with one-month implied volatility on EUR\/USD falling to 7.8% from over 9.5% just last week. This suggests the market is pricing in a calmer period ahead, which cheapens the cost of options.<\/p>\n
This situation feels much more controlled than the political turmoil that rocked French markets back in 2022, suggesting the market is not pricing in a systemic threat. However, we must remember that the Eurozone’s September 2025 flash CPI data came in slightly above expectations at 2.8%, meaning the European Central Bank’s work is not done. Therefore, while French politics are stable for now, monetary policy remains a key variable.<\/p>\n
Given the new support level and falling volatility, strategies that benefit from the Euro not falling further look appealing. Selling EUR\/USD puts with strike prices below 1.1550 could be a way to collect premium while expressing the view that the worst is over for now. For those anticipating a slow grind higher, structuring bull call spreads could offer a defined-risk way to position for a modest rally toward 1.1700.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Euro gains on French political stability; potential EUR\/USD support near 1.160 if reforms are postponed.<\/p>\n","protected":false},"author":62,"featured_media":17021,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-32300","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/32300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=32300"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/32300\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17021"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=32300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=32300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=32300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}