{"id":439879,"date":"2026-10-12T20:00:06","date_gmt":"2026-10-12T13:00:06","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/eur-usd-consolidates-at-the-lows-as-frances-budget-and-us-cpi-remain-in-focus-439879\/"},"modified":"2026-10-12T20:00:06","modified_gmt":"2026-10-12T13:00:06","slug":"eur-usd-consolidates-at-the-lows-as-frances-budget-and-us-cpi-remain-in-focus","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/eur-usd-consolidates-at-the-lows-as-frances-budget-and-us-cpi-remain-in-focus-439879\/","title":{"rendered":"EUR\/USD consolidates at the lows as France’s budget and US CPI remain in focus"},"content":{"rendered":"
\n

\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 recently pushed French government bond
\n yields higher and widened the spread over German Bunds to its highest level
\n since the 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 but at
\n least Trump ruled out new strikes before the November elections last week. This
\n week, we also have the US CPI report on the agenda, which could trigger big
\n moves in the markets.<\/p>\n

A hotter than expected core CPI could bring a
\n rate hike in October back on the table and give the US dollar a boost. A soft
\n report, on the other hand, will likely weigh on the greenback in the short-term
\n on a fall in Treasury yields.<\/p>\n

On the EUR side, the
\n probabilities of an ECB rate hike in October have faded following the sharp
\n widening in the French-German bond spread, as policymakers are likely to remain
\n cautious about adding further pressure to already fragile financial markets. <\/p>\n

However, markets still
\n expect the ECB to raise rates in December, reflecting persistent inflationary
\n pressures due to higher energy prices. In terms of economic data, the latest
\n Eurozone CPI showed headline inflation surging to 3.8% in September from 3.2%
\n in August, largely due to higher energy prices. Core inflation remained
\n relatively contained, edging up to 2.5% from 2.4%. <\/p>\n

Looking ahead, energy
\n prices and developments in the Middle East will remain important drivers of the
\n inflation outlook. Any sustained decline in energy prices could reduce
\n near-term inflation pressure and give the ECB more room to delay further
\n tightening. This would also be positive for the euro on improved risk sentiment
\n and lower Fed rate hike expectations.<\/p>\n

The euro will also remain
\n sensitive to developments in the bond market, particularly the French-German
\n spread. France\u2019s government has proposed a 2027 budget targeting a deficit of
\n 5.0% of GDP, supported by spending restraint and higher tax revenues. This is
\n lower than the previously 5.4% and helped ease market concerns somewhat. However,
\n the plan still faces parliamentary hurdles, and Eurozone finance ministers and
\n the ECB have urged France to pass a credible budget to restore market
\n confidence. <\/p>\n

Traders will keep a close
\n eye on France where improvements would be positive for the euro, while negative
\n outcomes will likely continue to weigh on the single currency. <\/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 on France\u2019s debt woes. The nearest key support is around the
\n 1.1067 level. If the price gets there, we can expect the buyers to step in,
\n with a defined risk below the level, to position for a recovery into the major
\n downward trendline. The sellers, on the other hand, will want to see the price
\n breaking lower to increase the bearish bets into the 1.08 handle next.<\/p>\n

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

On the 4 hour chart, we
\n have a downward trendline defining the selloff since early September. The sellers
\n will likely continue to lean on the trendline, with a defined risk above it, to
\n keep pushing into new lows. The buyers, on the other hand, will look for a
\n break to start positioning into the major downward trendline, with the 1.1285
\n level as the first target.<\/p>\n

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

On the 1 hour chart, we can
\n see that the pair has been bottoming out since the French proposed budget
\n deficit for 2027 got lowered to 5.0% from 5.4%. We have a support zone around
\n the 1.1160 level. The buyers will likely continue to step in around the
\n support, with a defined risk below it, to keep targeting a break above the trendline
\n and new highs. The sellers, on the other hand, will want to see the price breaking
\n lower to increase the bearish bets into new lows. The red lines define the average daily range<\/a> for today.<\/p>\n

UPCOMING CATALYSTS<\/p>\n

On
\n Wednesday<\/a> we have the US CPI report. On Thursday, we get the US PPI, the US
\n Retail Sales and the latest US Jobless Claims figures.\u00a0 <\/p>\n

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

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