Euro plummets as French bonds sell-off intensifies after a day relief
The Euro (EUR) comes under pressure against its peers again on Wednesday after a relief recovery the previous day. In the European trade, the major currency is down 0.63% at around 1.1188 against the US Dollar.
The Euro (EUR) experienced a decline on Wednesday, after a brief relief on the previous day. The major currency fell 0.63% against the US Dollar, reaching approximately 1.1188. French government-backed securities sales resulted in renewed concerns about widening bond yield spreads between France and the rest of the Eurozone, negatively impacting the Euro.
10-year French bond yields surged 2.56% to near 4.91%, recovering Tuesday's losses. French bonds saw strong buying interest on Tuesday, following Marine Le Pen's proposal for €140 billion in spending cuts, up from the previous €125 billion. However, doubts arose about whether the minority government could pass the budget cuts without additional concessions.
The French Higher Committee for Public Finance expressed concerns about the government's 2027 budget optimism, which contrasted with the €125 billion spending cut plan they initially proposed. The US Dollar's strength also weighed on the Euro, with the US Dollar Index (DXY) increasing almost 0.5% to around 102.34. Technical analysis indicates a bearish near-term bias for EUR/USD, trading at 1.1190 and near the 20-day exponential moving average (1.1372).
Traders are monitoring the Federal Open Market Committee's September meeting minutes, expected at 18:00 GMT, and watching for oversold conditions to trigger a corrective bounce.
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