Euro attracts some sellers to near 1.1200 on French political turmoil, fiscal risks

The EUR/USD pair faces some selling pressure to near 1.1215 during the early Asian trading hours on Monday. The Euro (EUR) weakens against the US Dollar (USD) amid fiscal risks in France after the French debt risk premium jumped in early October.

The spread between French and German 10-year government bonds surged beyond 150 basis points (bps) in the previous session, signaling heightened investor concerns. This key indicator of financial market risk has reached its highest level since the Eurozone debt crisis in 2011.

Protests in several cities in France descended into clashes between police and demonstrators, sparking some of France’s worst street violence in years, with looting and landmarks set on fire, per Bloomberg. French President Emmanuel Macron said that the country felt anger and shame following widespread violence over the weekend and called for order to be restored.

ECB President Christine Lagarde said during the IMF-World Bank summit in Bangkok that France must solve its own structural problems through domestic fiscal policy. Elsewhere, Spain is also heading to a snap general election on November 29, fueling further political instability across the Eurozone.

Across the pond, Federal Reserve (Fed) Chair Kevin Warsh on Friday offered no clues about future rate decisions, saying he does not "prejudge meetings.” Markets are now pricing in nearly an 83.9% chance that the Fed will keep rates unchanged later this month, up from 49% a month earlier, according to the CME FedWatch Tool.

Nordea sees scope for further ECB hikes and modest upside in longer EUR yields

Analysts at Nordea maintain a constructive view on the ECB’s tightening path, stating that “we continue to expect two further 25bp rate hikes from the ECB, one in December and another in March 2027, taking the deposit rate to 3%.” In their assessment, the policy backdrop and data flow “should be sufficient to deliver another hike when new staff projections become available in December,” with the bank arguing that this environment “supports a pre-emptive December hike if price pressures continue to broaden, while leaving room for the ECB to move more cautiously if core inflation and wages remain contained.”

On the rates side, Nordea notes that “we continue to see modest upside potential for longer EUR yields in the medium term,” but cautions that “this leaves room for a correction lower in the short term, especially if incoming inflation data show only limited broadening or concerns about growth become more prominent.”

Warsh cautious on crisis scars but underscores investment surge and AI focus

Fed Chair Warsh’s speech scores 5.6/10 on the FXS Speechtracker, modestly below the 6.1/10 historical average, signaling a slightly less impactful tone relative to the established baseline despite broadly aligned macro views since the September FOMC. The admission of being “over-scarred from the global financial crisis” points to a structurally cautious bias on financial stability and tail risks, even as Warsh highlights a structural growth backdrop and an investment surge driven by “good policies” and transformative AI developments. Warsh’s refusal to pre-judge the October and December meetings and emphasis on crystallizing data on output, employment, and inflation keeps the Dollar narrative data-dependent rather than pre-committed.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points to a still-elevated level of 127.51, confirming that the overall policy tone remains firmly in hawkish territory despite the slightly softer FXS Speechtracker score. With the index well above the neutral 100 mark, markets are likely to interpret Warsh’s focus on price stability, AI-driven data confidence, and vigilance on negative tailside risks as consistent with a bias toward maintaining restrictive policy settings.

Technical Analysis: EUR/USD keeps a bearish vibe under the 100-day SMA

In the daily chart, EUR/USD trades with a bearish near-term bias, as spot remains capped beneath the 100-day simple moving average (SMA) and the Bollinger middle band. Price holds closer to the Bollinger lower band support than to overhead resistance, while the Relative Strength Index (RSI) at 37.5 sits just below neutral, hinting that recent selling pressure is easing but not yet reversing.

On the topside, initial resistance emerges at the Bollinger middle band near 1.1270, ahead of a stronger barrier at the upper Bollinger band around 1.1440 and the 100-day SMA at 1.1465, which together define a dense supply zone limiting recovery attempts. On the downside, the Bollinger lower band at 1.1100 offers the next key support level, and a decisive break below this floor would likely extend the bearish phase toward lower psychological and historical levels.