The EUR\/USD is experiencing support as US rates decrease, and French PM S\u00e9bastien Lecornu seems likely to withstand no-confidence votes in parliament. This development follows an agreement to delay pension reforms to appease the Socialists.<\/p>\n
The euro and French bonds view these events positively in the short term. However, delaying pension reforms complicates long-term fiscal consolidation efforts. Bond market participants appear to favour this delay over the possibility of early elections, pulling OAT:Bund spreads back within 80bp.<\/p>\n
FX traders might align with bond market reactions, implying positive movement for the euro. Despite this, breaking the EUR\/USD above the 1.1685\/1730 range soon seems unlikely. Prolonged consolidation could lead to gains as the currency pair approaches a typically bullish period in November and December, with a year-end estimate of 1.20.<\/p>\n
The FXStreet Insights Team curates market observations from renowned experts, offering insights on various currency pairs and commodities. Analyses cover trades like USD\/CNH, USD\/JPY, XAU\/USD (Gold), NZD\/USD, and AUD\/USD, focusing on potential market dynamics. The team underscores analysis and research’s role in informed trading decisions.<\/p>\n
With US interest rate expectations softening, the EUR\/USD is finding some footing. Recent data showing US headline CPI cooling to 2.8% has pushed the 10-year Treasury yield back below 4.0%, taking some pressure off the dollar. This provides a supportive backdrop for the euro as we head into the final quarter of the year.<\/p>\n
The immediate political risk in France is fading, which is calming sovereign debt markets. The spread between French and German 10-year bonds has tightened back to 78 basis points, a signal that investors are less worried about instability for now. We see FX traders taking this as a green light, viewing the stable French bond market as a positive for the single currency in the short term.<\/p>\n
For derivatives traders, the current environment suggests a two-tiered approach. With the spot price consolidating below the significant 1.1730 resistance level, selling November-expiry call options with a strike price around 1.1800 could be a viable strategy to earn premium. This capitalizes on the view that a major breakout is unlikely in the immediate coming weeks.<\/p>\n
Looking further out towards year-end, we maintain a more bullish outlook with a target of 1.20. The historical seasonal tendency for the US dollar to weaken in December, as we saw in late 2023, provides a tailwind for this view. Traders could consider buying December-expiry EUR\/USD call spreads, such as buying the 1.17 call and selling the 1.20 call, to position for this potential move in a cost-defined manner.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD steadies as US rates fall; French politics calm; euro outlook stable with year-end gains possible.<\/p>\n","protected":false},"author":62,"featured_media":16965,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-32410","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t