Insights 
VT 
The Euro has fallen from Friday’s high of 0.8730 to below the 0.8690 support level. Reports of French Prime Minister Sébastien Lecornu’s resignation are contributing to the downward movement, nearing the 0.8665 support level.
Lecornu’s resignation marks the fifth Prime Minister change under President Macron in two years, adding to a strained Euro amidst a fiscal crisis in France. Technically, the Euro is trading within a broadening wedge, often formed after a peak, with indicators in the 4-hour chart showing negative territory.
Current Euro Trading Levels
As of now, support is holding at 0.8675, with a trendline at 0.8665. A further downside could target the September lows at the 0.8635 mark. Resistance appears at the former support level of 0.8665 and upwards near 0.8725 and 0.8730.
In currency movements, the Euro was strongest against the Japanese Yen today. Percentage changes for major currencies are visible in the heat map, with noteworthy performances and relative strengths observed. For instance, the Euro changed by 0.11% against the Yen. The map allows for comparison using base and quote currencies, helping to interpret currency performance throughout the day.
We believe the political instability in France is creating a clear bearish signal for the Euro. Derivative traders should consider buying put options on the EUR/GBP pair, targeting strikes near the 0.8665 and 0.8635 support levels mentioned. This strategy allows for profiting from a continued slide while capping the maximum potential loss.
The uncertainty from Paris is causing a spike in market nervousness. We are seeing implied volatility on one-month Euro options rise sharply, jumping over 20% in the last trading session alone. This suggests the market is bracing for larger price swings in the coming weeks.
Impact of Political Turmoil
This political turmoil is hitting at a time when France’s fiscal health is already under scrutiny, a concern we remember from the credit rating downgrades back in 2024. France’s public debt, which we saw climb to over 112% of GDP in the last official report, leaves little room for fiscal maneuvering to calm the situation. The Prime Minister’s resignation only amplifies market fears about the country’s ability to manage its finances.
We’ve seen this playbook before, particularly during the European sovereign debt crisis in the early 2010s. Back then, political headlines from a single country repeatedly drove the Euro’s value, creating profitable trends for those positioned correctly. This current situation with France, the Eurozone’s second-largest economy, could have a similarly sustained impact.
For traders with a higher risk tolerance, selling EUR futures contracts could be a direct way to act on this bearish view. Using the 0.8730 level as a potential stop-loss could help manage the risk of a sharp reversal. The data confirms the Euro’s broad weakness, as it has fallen against every major currency except the Japanese Yen today.
