EUR/USD holds losses near one-month lows with Fed's minutes on focus

EUR/USD keeps hovering right above one-month lows at 1.1605, weighed by investors’ concerns about the fragile political and fiscal situation in France. The pair trades at 1.1635 at the time of writing, with investors awaiting the release of the minutes of the last Fed meeting along with a string of Federal Reserve (Fed) and European Central Bank (ECB) speakers, including President Christine Lagarde.

The Common currency had come under increasing pressure earlier on the day as pressure on French President Emmanuel Macron to call a snap election mounted amid growing criticism from his own ranks. Former allies have joined the demands of opposition parties to call elections or resign, and rating agencies have warned of a further downgrade of France’s sovereign credit status if the political impasse drags on.

Across the Atlantic, the political scenario is not much better. US Senate Democratic and Republican leaders remain unable to find a way to restart funding as the shutdown enters its second week, and hopes of a breakthrough this week have fallen to 23% according to a poll by Polymarket. The lack of progress has started to erode market sentiment, boosting demand for the US Dollar and other traditional safe havens.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.

ECB&#8217;s President Lagarde speech

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.30%	0.10%	0.30%	0.03%	0.27%	0.67%	0.38%
EUR	-0.30%		-0.19%	0.04%	-0.25%	-0.05%	0.42%	0.08%
GBP	-0.10%	0.19%		0.25%	-0.04%	0.18%	0.61%	0.29%
JPY	-0.30%	-0.04%	-0.25%		-0.32%	-0.05%	0.30%	0.01%
CAD	-0.03%	0.25%	0.04%	0.32%		0.22%	0.64%	0.33%
AUD	-0.27%	0.05%	-0.18%	0.05%	-0.22%		0.42%	0.14%
NZD	-0.67%	-0.42%	-0.61%	-0.30%	-0.64%	-0.42%		-0.30%
CHF	-0.38%	-0.08%	-0.29%	-0.01%	-0.33%	-0.14%	0.30%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

Daily digest market movers: Political uncertainty hurts the Euro

The growing political uncertainty in France keeps bleeding the Euro this week, while investors’ concerns about a prolonged shutdown of the US federal government have started to hurt market sentiment and boost demand for the safe-haven USD. In the absence of key macroeconomic data to alter this view, the bearish EUR/USD trend has further room to go.
On Wednesday, France’s recently resigned Prime Minister, Sébastien Lecornu, assured that he is going to present a solution to President Macron later today and affirmed that “the dissolution of the parliament is becoming more remote”. These comments have given some air to an ailing Euro, but the broader trend remains strongly bearish.
On Tuesday, ECB President Christine Lagarde reiterated that the disinflationary process in the Eurozone has been completed and that she is hopeful that France will meet its international commitments and produce a budget in time.
Eurozone data has failed to improve investors’ sentiment. German Factory Orders figures showed a 0.8% decline in August, against market expectations of a 1.4% growth, following a 2.7% contraction in July. Year-on-year, orders have increased at a 1.5% rate, after a 3.3% fall in July.
Fed policymakers continue showing their divergences. Minneapolis Fed President Neel Kashkari has warned about a burst of inflation if the bank lowers rates too fast, while US President Donald Trump’s latest appointment, Fed Governor Stephen Miran, stated that inflation is due to population increases and reiterated that monetary policy needs to ease.

Technical Analysis: EUR/USD remains dangerously close to 1.1610 support

The EUR/USD technical picture reflects strong bearish pressure. The 4-hour chart Relative Strength Index (RSI) is low but not yet at oversold levels, and the Moving Average Convergence Divergence (MACD) remains well below the signal line, with red histogram bars increasing, suggesting that further depreciation is likely.

Bears are now testing support at the 1.1610 area, where the pair was contained the price on September 2 and 3. Further down, the target would be the August 22 and 27 lows, near 1.1575, and then the August 5 low at 1.1530, although this latter level seems out of reach for this Wednesday.

Upside attempts are likely to be challenged at the previous support area of 1.1645 (September 25 and October 6 lows), ahead of the descending trendline resistance, now around 1.1720. A break of this level would suggest a trend shift and bring last week’s highs at the 1.1765-1.1775 area into focus.

Economic Indicator

ECB’s President Lagarde speech

The European Central Bank’s President Christine Lagarde, born in 1956 in France, has formerly served as Managing Director of the International Monetary Fund, and minister of finance in France. She began her eight-year term at the helm of the ECB in November 2019. As part of her job in the Governing Council, Lagarde holds press conferences in detailing how the ECB observes the current and future state of the European economy. Her comments may positively or negatively the Euro’s trend in the short term. Usually, a hawkish outlook boosts the Euro (bullish), while a dovish one weighs on the common currency (bearish).

Economic Indicator

FOMC Minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.