{"id":439542,"date":"2026-10-06T18:19:17","date_gmt":"2026-10-06T11:19:17","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/eur-usd-rebounds-as-french-government-takes-steps-to-reduce-deficit-narrowing-oat-bund-spread-439542\/"},"modified":"2026-10-06T18:19:17","modified_gmt":"2026-10-06T11:19:17","slug":"eur-usd-rebounds-as-french-government-takes-steps-to-reduce-deficit-narrowing-oat-bund-spread","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/eur-usd-rebounds-as-french-government-takes-steps-to-reduce-deficit-narrowing-oat-bund-spread-439542\/","title":{"rendered":"EUR\/USD rebounds as French government takes steps to reduce deficit, narrowing OAT-Bund spread"},"content":{"rendered":"
\n

FUNDAMENTAL
\n OVERVIEW<\/p>\n

\u00a0<\/p>\n

USD:<\/p>\n

The US dollar has
\n been supported recently despite a dovish repricing triggered by Fed\u2019s Williams
\n and Fed\u2019s Jefferson comments that pushed back against expectations of a rate
\n hike in October. <\/p>\n

The main reason were
\n risk-off flows into the greenback due to European debt concerns. The focus has
\n been particularly on France, where political uncertainty and concerns over the
\n country’s large fiscal deficit have pushed French government bond yields higher
\n and widened the spread over German Bunds to its highest level since the
\n eurozone debt crisis. <\/p>\n

A stabilization in French spreads could allow some of the euro’s risk
\n premium to unwind and trigger a pullback in the US dollar, while further
\n widening and contagion to other countries would likely keep the greenback
\n supported.<\/p>\n

Moreover, the US-Iran negotiations continue to be at a stalemate and with a
\n light calendar this week, the focus will probably remain on the Middle East and
\n the French bonds.<\/p>\n

A breakthrough would be negative for the US
\n dollar as the aggressive rate hike bets will likely get pared back. A re-escalation,
\n on the other hand, will likely continue to support the greenback into new
\n highs.<\/p>\n

EUR:<\/p>\n

On the EUR side, the
\n probabilities for a rate hike in October evaporated following the surge in the French-German
\n bond spread. Traders expects the ECB to hold off from hiking for now to avoid spooking
\n markets further. <\/p>\n

In terms of economic data, the
\n latest Eurozone CPI showed headline inflation increasing further mainly due to
\n energy prices, but the core measure remained relatively contained, ticking up
\n to 2.5% vs 2.4% in the prior month.<\/p>\n

Energy prices have eased a
\n bit in recent weeks and the situation in the Middle East improved somewhat as
\n US and Iran continue to negotiate while refraining from new attacks. Looking
\n ahead, the euro will likely be more sensitive to developments in the bond
\n market, so traders will keep a close eye on that.<\/p>\n

There are already some tentatively
\n positive signs as France\u2019s
\n government unveiled plans to sharply narrow the budget deficit by restraining
\n spending and raising tax revenues<\/a>. This has helped to stabilise the bond
\n market in the short-term and we\u2019ve seen a tightening in the OAT-Bund spread and
\n a rebound in the euro. <\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

EURUSD TECHNICAL
\n ANALYSIS \u2013 DAILY TIMEFRAME<\/p>\n<\/p>\n

On the daily chart, we can
\n see that EURUSD<\/a>has been selling off heavily
\n in the past weeks. We have a downward trendline defining the bearish momentum.
\n If we get a pullback, we can expect the sellers to lean on the trendline, with
\n a defined risk above it, to keep pushing into new lows. The buyers, on the
\n other hand, will look for a break higher to start piling in for a rally into
\n the next major trendline around the 1.1550 level. <\/p>\n

EURUSD TECHNICAL
\n ANALYSIS \u2013 4 HOUR TIMEFRAME<\/p>\n<\/p>\n

On the 4 hour chart, we can
\n see the most recent lower high at 1.1285 that could act as resistance. The
\n sellers will likely step in around the trendline and the lower high to keep
\n pushing into new lows, while the buyers will need a break to open the door for
\n new highs and potentially reverse the recent trend.<\/p>\n

EURUSD TECHNICAL ANALYSIS \u2013
\n 1 HOUR TIMEFRAME<\/p>\n<\/p>\n

On the 1 hour chart, we
\n have a minor upward trendline defining the current pullback. If the price moves
\n back into the trendline, we can expect the buyers to lean on it, with a defined
\n risk below it, to keep targeting a break above the downward trendline. The sellers,
\n on the other hand, will want to see the price breaking lower to increase the
\n bearish bets into new lows. The red lines define the average daily range<\/a> for today.<\/p>\n

UPCOMING CATALYSTS<\/p>\n

Tomorrow<\/a>we
\n have the FOMC meeting minutes. On Thursday, we get the latest US Jobless Claims
\n figures. On Friday, we conclude the week with the University of Michigan
\n Consumer Sentiment survey.<\/p>\n

This article was written by Giuseppe Dellamotta at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

FUNDAMENTAL OVERVIEW \u00a0 USD: The US dollar has been supported recently despite a dovish repricing triggered by Fed\u2019s Williams and Fed\u2019s Jefferson comments that pushed back against expectations of a rate hike…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439542","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439542"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439542\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}