EUR/USD slips toward one-month low as France political turmoil and strong U.S. dollar weigh

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Euro slips toward one-month low

Highlights

- EUR/USD trades near 1.1665, testing one-month lows as sellers maintain control.

- France’s political turmoil and weak Eurozone data amplify downside pressure.

- U.S. dollar strength continues to cap recovery attempts amid firm Treasury yields.

The move follows another rejection from the descending trendline drawn from the September high near 1.19, confirming that sellers remain firmly in control.

Technical structure turns bearish

The chart shows price action sitting just below a confluence of short-term moving averages, with the 20- and 50-day EMAs clustered between 1.1706 and 1.1722. This range has now flipped into resistance, capping recovery attempts and reinforcing the short-term bearish bias. A sustained move below the 1.1650–1.1645 zone would expose the next Fibonacci retracement level at 1.1580, followed by 1.1500, where long-term support and strong demand converge.

EUR/USD price dynamics (Source: TradingView)

The RSI on the four-hour chart hovers near 35, indicating bearish momentum without yet entering oversold territory. The repeated failure of RSI to reclaim the 50 line underscores the persistent selling pressure. Unless the pair can regain the 1.1720–1.1725 region, the outlook will remain tilted toward further downside.

Political and economic headwinds in Europe

France’s political instability has added a new layer of uncertainty to the euro’s outlook. The unexpected resignation of Prime Minister Sébastien Lecornu has raised concerns about the durability of President Emmanuel Macron’s government, particularly as fiscal pressures mount. The country’s rising budget deficit has further dented confidence, while weak German factory orders have reinforced concerns about sluggish Eurozone growth.

Comments from European Central Bank (ECB) officials later this week could influence sentiment. President Christine Lagarde’s recent remark that “the disinflation phase is over” has already unsettled markets, sparking speculation about whether the ECB may adopt a firmer policy stance. However, without concrete guidance on future rate decisions, traders remain cautious.

Dollar strength keeps pressure on the euro

Across the Atlantic, the U.S. dollar continues to strengthen, buoyed by elevated Treasury yields and investor demand for defensive assets. The greenback’s resilience has been further supported by hawkish tones from Federal Reserve officials, who have left the door open to policy adjustments despite easing inflation trends.

As multiple Fed policymakers are scheduled to speak this week, traders will be watching closely for any hints about future rate direction. For now, the dollar’s yield advantage and risk-off sentiment continue to attract capital flows, keeping EUR/USD on the defensive.

In summary, EUR/USD remains vulnerable below 1.1720, with the near-term bias pointing lower as long as political instability in Europe persists and U.S. dollar strength dominates. A break below 1.1645 would likely accelerate losses toward 1.1580 and possibly 1.1500, while only a decisive close above 1.1725 would begin to ease downside pressure.

In earlier analysis, EUR/USD was seen consolidating within an ascending structure that has now given way to renewed bearish momentum. The latest breakdown confirms that the pair’s bias has shifted decisively toward the downside amid deteriorating European fundamentals.

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