EUR/USD price drops near $1.16 as French crisis and Fed outlook drive renewed selling pressure

Traders Union
All News
Financial News
Euro slides toward $1.16

Highlights

- EUR/USD falls below 1.1650, trading near 1.1620 amid renewed French political turmoil.

- Technical charts show a breakdown from the August uptrend with 1.1590 as key support.

- Focus shifts to FOMC minutes and U.S. shutdown developments for near-term direction.

The uncertainty has driven investors toward the dollar’s relative safety, though the ongoing U.S. government shutdown has introduced volatility into greenback flows.

Euro pressured as political risk escalates

The euro’s losses deepened as French fiscal worries resurfaced, highlighting broader challenges in the Eurozone’s economic outlook. Market confidence in France’s fiscal management has deteriorated, with bond spreads widening as investors demand higher risk premiums. The combination of political uncertainty and weak German factory data has amplified the euro’s vulnerability, while expectations for a sluggish recovery continue to weigh on sentiment.

EUR/USD price dynamics (Source: TradingView)

From a technical standpoint, the EUR/USD chart shows a decisive breakdown from the ascending trendline that had guided the pair since mid-August. The pair is now testing the 1.1600 level, which coincides with the 38.2% Fibonacci retracement near 1.1590. A sustained close below this zone would likely accelerate selling pressure, exposing deeper support at 1.1545 and then 1.1485. On the other hand, any rebound would face strong resistance near the 20- and 50-period EMAs at 1.1680 and 1.1707, respectively.

The RSI has dropped to 38, nearing oversold territory, which indicates the potential for a short-term pause in selling. However, with the pair trading below all major moving averages, the broader outlook remains tilted to the downside unless buyers reclaim the 1.1720 level.

Dollar steadies ahead of Fed minutes

The dollar, while firm, is also facing crosscurrents as traders weigh the implications of the ongoing government shutdown. Although the shutdown has disrupted the release of several key data points, it has not yet eroded the greenback’s appeal. Investors are now turning their focus to the Federal Open Market Committee (FOMC) minutes, set for release later this week, which could provide clarity on the timing and pace of upcoming rate cuts.

Market consensus still expects a 25-basis-point rate cut in October, followed by another in December. Should the minutes confirm a dovish tone, the dollar could ease slightly, offering temporary relief for the euro. However, with Europe’s economic and political backdrop deteriorating, any such rebound is likely to be limited.

Outlook

For now, EUR/USD remains in a bearish phase, with the 1.1600–1.1590 zone acting as a critical pivot. A decisive breakdown below this level would open the path toward 1.1545 and 1.1485, while resistance at 1.1700–1.1720 caps upside potential. The pair’s next move will likely depend on the tone of the FOMC minutes and whether French political uncertainty deepens in the coming sessions.

Earlier analysis highlighted 1.1650 as a key support level, warning that a breakdown would likely trigger an accelerated decline toward 1.16. This scenario has now materialized, with momentum confirming bearish continuation as the euro grapples with renewed fiscal and political stress.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.