Despite domestic headwinds, the euro continues to find support near its 100-day Exponential Moving Average (EMA), signaling that buyers remain active around 1.1555. However, ongoing political unrest in France—where coalition negotiations have intensified following recent parliamentary challenges—could limit further upside momentum.
Investors are increasingly cautious, expecting the European Central Bank (ECB) to adopt a more measured tone as regional risks rise. The euro’s performance has also been capped by a firmer US Dollar (USD), which is gaining ground amid speculation that Washington and Beijing might reach a temporary trade compromise.
Technical Outlook: Bulls Hold Ground Above 1.1600
From a technical perspective, EUR/USD remains structurally bullish as long as it trades above its 100-day EMA. The daily Relative Strength Index (RSI) at 42.6 suggests a weakening momentum but no clear reversal yet.
Immediate resistance lies at 1.1657—the low from September 26—followed by higher resistance at 1.1758 and 1.1820. A breakout above these levels could signal renewed strength in the euro. On the downside, key support sits at 1.1555, while a break below it could open the door toward 1.1403 (July 31 low) and 1.1347 (June 2 low).
Market Drivers: Trade Sentiment and Political Uncertainty
Global market sentiment remains delicately balanced as traders monitor signals from both Washington and Beijing. Optimism over reduced trade friction has lent support to risk-sensitive assets, but the dollar’s safe-haven appeal persists as investors await clarity on fiscal and tariff negotiations.
Meanwhile, political instability in France continues to weigh on the eurozone’s confidence. Analysts believe that prolonged uncertainty in Europe’s second-largest economy could dampen growth expectations and influence ECB’s upcoming policy stance.
Euro Fundamentals: Balancing Growth and Inflation
Beyond politics, euro traders are eyeing upcoming inflation readings and ECB commentary for fresh clues. Persistent inflationary pressures combined with sluggish growth have put policymakers in a tough spot—needing to balance support for growth while maintaining price stability. The ECB’s next meeting could provide direction on rate adjustments and asset purchase programs.
Globally, continues to stress gradualism, while US Federal Reserve officials signal potential rate adjustments depending on economic data trends. These diverging policy paths are expected to keep EUR/USD volatile in the short term.
Outlook: Range-Bound but Cautiously Bullish
For now, traders expect EUR/USD to trade in a narrow range between 1.1550 and 1.1700. The pair’s short-term bias remains mildly bullish as long as it stays above the 100-day EMA, though political developments in France and shifts in global trade sentiment could quickly alter momentum.
“The euro remains supported, but the absence of strong domestic drivers and the ongoing French political uncertainty might limit any sustained rally,” said a senior forex analyst based in London.
In summary, the euro holds firm for now, but both macro and political headwinds mean traders should remain alert to any break below key technical levels in the coming sessions.