FX Daily: French risk keeps harming ECB hawks
USD: Staying supported The dollar has continued to find support at the start of this week. The euro’s idiosyncratic weakness is still playing a role, and so are global bond yields that keep pushing higher. Strong equity performance likely capped USD gains and allowed some high-beta currencies to outperform, but the domestic backdrop remains constructive ...
The euro is struggling with a fiscal risk premium and lower expectations for the European Central Bank's rate decisions. The euro's two-year swap rate differential has reached -167 basis points, a level not seen since August 2025. The euro started the week at the bottom of the G10 scorecard, highlighting the importance of the French bond market for FX investors.
The euro could test the 1.110 level or even 1.100 if the fiscal risk premium in French bonds intensifies. Markets are now waiting for details from Marine Le Pen on a counter-budget.
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