EUR/USD steadies near $1.161 amid French political turmoil

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EUR/USD consolidates near $1.161

Highlights

- EUR/USD trades near 1.161 after repeated tests of key support around 1.16.

- France’s political instability and weak eurozone data add to the currency’s bearish tone.

- The dollar stays firm ahead of Powell’s speech as traders await clarity on Fed rate path.

A decisive break below this region could deepen losses toward 1.1544 and 1.1486, while resistance remains capped at 1.1655 and the 100-EMA near 1.1710.

Fragile technical structure keeps euro under pressure

The technical backdrop remains fragile. The 20-EMA has crossed below the 50-EMA, signaling that near-term momentum has turned bearish, while both moving averages remain positioned below the 100- and 200-EMA, confirming a weak bias. Momentum indicators echo this tone, with the RSI hovering near 40 — signaling that sellers remain dominant but without oversold conditions that could trigger a rebound. Unless price action reclaims the 1.1650–1.1700 zone, the pair is likely to remain trapped in a downward trajectory, with any rallies seen as corrective.

EUR/USD price dynamics (Source: TradingView)

The 4-hour chart underscores this weakness. After failing to hold above 1.1780, EUR/USD broke through its ascending trendline, shifting its short-term structure decisively bearish. With the 1.1600 level now being repeatedly tested, traders are watching closely for a break that could invite fresh selling pressure. The next potential downside target lies at 1.1544, where prior demand zones converge.

Political uncertainty adds to eurozone pressure

France remains at the center of Europe’s political turbulence following Prime Minister Sebastien Lecornu’s resignation earlier this week. The uncertainty surrounding his successor has delayed progress on the 2026 budget, eroding investor confidence. Meanwhile, Germany’s latest trade figures offered little relief, as its surplus widened primarily due to falling imports — a sign of weak domestic demand. Combined with lackluster industrial output across the eurozone, these developments underscore the region’s fragile economic footing.

On the U.S. front, the Federal Reserve’s latest meeting minutes showed a divided stance on future rate cuts. While policymakers remain open to two more cuts this year, the ongoing government shutdown has disrupted the release of critical data, adding volatility to the greenback’s outlook. Despite this, safe-haven demand has kept the dollar buoyant, particularly as political risks in Europe deepen. Investors now await Fed Chair Jerome Powell’s upcoming remarks for additional clarity on monetary policy direction.

Outlook

EUR/USD remains vulnerable as long as it trades below the 1.1650–1.1700 range. A clear break under 1.1590 would confirm renewed bearish control, setting the stage for a move toward 1.1544. On the other hand, a rebound above 1.1700 would be required to signal stabilization and neutralize the current downtrend. For now, the bias remains tilted to the downside as Europe grapples with political tension and the dollar retains its safe-haven edge.

Earlier analysis highlighted the $1.16 zone as a critical pivot for near-term direction. That level continues to define the market’s structure, serving as the dividing line between stabilization and further decline as traders weigh European political developments and U.S. policy signals.

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