Euro gains modestly on persistent USD selling; France's debt concerns limit upside

With the USD subdued near a multi-week low, EUR/USD draws renewed buying interest on Friday.
Lower US bond yields and expectations of unchanged Fed rates keep the USD under pressure.
France’s debt crisis could restrain Euro gains, while geopolitical risks may cushion the USD’s decline.

EUR/USD trades near 1.1225. Follow-through buying in Friday’s Asian session extends the overnight rebound from below 1.1200. Conflicting fundamental signals, however, leave the pair within the range established over the past week.

The benchmark US Treasury yield has dropped below 5% to its lowest in more than a month as investors rotate out of Artificial Intelligence (AI) and technology stocks into safe-haven government bonds. Recent comments from US Federal Reserve (Fed) officials have also indicated no urgency to increase interest rates. Together, these factors leave the US Dollar (USD) subdued near the three-week low reached on Thursday, providing a key source of support for EUR/USD.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Last week’s US inflation data, however, reinforced expectations of an imminent Fed rate increase. Traders assign around an 80% probability to a December rise in borrowing costs, according to CME Group's FedWatch Tool. Inflation concerns linked to volatile oil prices also support the case for further Fed tightening. Combined with tensions in the Middle East, this could cushion further declines in the safe-haven US Dollar.

Iran’s Islamic Revolutionary Guard Corps (IRGC) has said further US attacks could lead Tehran to invade neighbouring countries and target bases used for US military operations under its new offensive strategy. The warning follows a report that the US and Israel have prepared detailed plans for renewed strikes against Iran. These developments keep the geopolitical risk premium firmly in place and may deter USD bears from initiating fresh positions.

France’s severe sovereign debt and political crisis could also continue to weigh on the shared currency, limiting EUR/USD gains. Flash PMIs from the Eurozone and the US are the next potential catalyst for traders. The main focus nevertheless remains the outcome of the two-day FOMC meeting beginning next Tuesday, alongside key US economic releases: the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index.

1.1225 area: EUR/USD daily chart

1.1437 SMA: EUR/USD Technical Outlook

Below the 50-day Simple Moving Average (SMA) at 1.1437, EUR/USD retains a bearish near-term bias. The pair also sits beneath every key Fibonacci retracement of the advance from 1.1116 to 1.1710. Initial resistance lies at 1.1256, the 23.6% retracement. Beyond that, resistance levels are closely grouped between the 38.2% retracement at 1.1343 and the 50.0% retracement at 1.1413, with additional reinforcement from the 50-day SMA at 1.1437.

Above this zone, the next levels are the 61.8% retracement at 1.1483 and the 78.6% retracement at 1.1583, ahead of the cycle high at 1.1710. If EUR/USD falls further, the Fibonacci anchor at 1.1116 represents the only nearby structural support. Buyers could try to slow the decline there.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

7-Day US Dollar Performance

Over the last 7 days, the US Dollar (USD) performed best against the Euro. The table below details its percentage changes against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.02%	-0.96%	-1.06%	-1.32%	-1.43%	-1.21%	-0.83%
EUR	0.02%		-0.95%	-1.04%	-1.33%	-1.46%	-1.26%	-0.82%
GBP	0.96%	0.95%		-0.10%	-0.35%	-0.54%	-0.28%	0.16%
JPY	1.06%	1.04%	0.10%		-0.30%	-0.39%	-0.22%	0.21%
CAD	1.32%	1.33%	0.35%	0.30%		-0.09%	0.09%	0.49%
AUD	1.43%	1.46%	0.54%	0.39%	0.09%		0.28%	0.63%
NZD	1.21%	1.26%	0.28%	0.22%	-0.09%	-0.28%		0.44%
CHF	0.83%	0.82%	-0.16%	-0.21%	-0.49%	-0.63%	-0.44%

Percentage movements between the major currencies appear in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read USD (base)/JPY (quote), for example, start with the US Dollar on the left and follow the row across to the Japanese Yen. The intersecting cell gives the percentage change for that pair.