VT 
The euro faces a delicate balance as French political uncertainty meets broad dollar strength. Investors are cautious, watching confidence votes and policy developments alongside key US economic data. Market direction for EUR/USD will depend on how these risks and signals unfold.
Dollar strength keeps euro under pressure
The euro remained under selling pressure on Thursday as concerns over French political uncertainty weighed on investor sentiment.
Prime Minister François Bayrou faces the risk of losing his position next month after unexpectedly calling a confidence vote tied to his deficit-reduction agenda.
This development has widened the yield spread between French and German government bonds, amplifying the political risk premium attached to the single currency.
The euro briefly dipped to 1.1573 – its weakest level in three weeks – before recovering to trade around 1.1642.
However, broader dollar positioning continues to be the dominant driver, with markets closely tracking upcoming US economic data and the Federal Reserve’s policy meeting scheduled for next month.
Technical analysis
Since touching a February low at 1.0210, EUR/USD has staged a steady rally, peaking near 1.1830 in July before entering a consolidation phase.
The pair is currently trading around 1.1641, holding above the key 1.1500 support zone. Moving averages (5, 10, 30) remain broadly supportive, though they have flattened, signalling a slowdown in momentum.
Picture: EUR/USD trades near 1.16416, easing from a recent 1.18297 peak, with support around 1.15000 and a neutral MACD, as shown on the VT Markets app.
The MACD is hovering near the zero line, reflecting a lack of decisive trend strength. On the upside, resistance is seen at 1.1700–1.1830, which must be broken for the broader uptrend to continue.
On the downside, a drop below 1.1500 would weaken the structure and potentially expose 1.1350 as the next major support level.
For now, EUR/USD looks range-bound, with traders awaiting direction from US data releases and future European Central Bank (ECB) signals.
Cautious forecast
If political instability in France escalates while the dollar stays resilient, EUR/USD could retest the 1.1600 handle or even slide toward 1.1500.
A sustained move below this level may open the door toward 1.1350, signalling a deeper correction in the pair.
On the other hand, a stabilisation in French bond markets alongside weaker US economic indicators could ease downside pressure on the euro.
Such a scenario would allow EUR/USD to rebound, first testing 1.1700 before attempting a push toward the 1.1750 resistance zone.
Traders should also keep an eye on upcoming ECB communications, as any hawkish policy signals could provide additional support for the single currency in the medium term.
Click here to open account and start trading.
