The EUR/USD pair extended its winning streak to a third straight day on Thursday, holding firm near 1.1650, its highest level in a week. The Euro continues to benefit from receding political risks in France, while the US Dollar remains under pressure from mounting US-China trade tensions and dovish Federal Reserve expectations.
Political Stability in France Supports Euro
France’s Prime Minister Sébastien Lecornu managed to survive two no-confidence votes on Thursday, providing short-term relief for Eurozone political stability. The second vote, introduced by far-right leader Marine Le Pen, garnered only 144 votes, far below the 289 required to unseat the government.
Lecornu’s decision to suspend controversial pension reforms and his avoidance of aligning with fringe parties has helped stabilize his position. However, his government still faces the tough task of pushing through a tight budget in a fragmented parliament.
US-China Trade Tensions Weigh on the Dollar
On the other side of the Atlantic, the US Dollar is under pressure as trade tensions with China intensify. President Donald Trump said in a recent interview that the US is effectively “already in a trade war” with China. US Treasury Secretary Scott Bessent added fuel to the fire, referring to China’s top trade negotiator as an “unhinged wolf,” further escalating diplomatic strain.
These tensions, combined with hopes of monetary easing from the Federal Reserve, are eroding support for the Greenback. Investors are now looking ahead to a scheduled meeting between Trump and Chinese President Xi Jinping, which could determine the fate of the current trade truce ending November 1.
Central Bank Commentary in Focus
In Europe, market participants are closely watching a speech by ECB President Christine Lagarde, who is expected to share her views on the global economic outlook during an IMF panel later in the day.
Meanwhile, ECB policymakers have struck a less dovish tone recently. Belgian central bank chief Pierre Wunsch said he is not troubled by market expectations of another rate cut, but the likelihood of such a move is “receding.” Austrian policymaker Martin Kocher echoed that sentiment, suggesting the ECB is at or near the end of its rate-cutting cycle.
In the US, the Philadelphia Fed Manufacturing Survey is the key data release of the day, followed by several speeches from Federal Reserve officials, which could give markets more clarity on the interest rate outlook.
Eurozone Data Mixed, But Euro Unfazed
Latest Eurostat figures showed Eurozone Industrial Production contracted by 1.2% in August, slightly better than the 1.6% decline forecast. The report had minimal impact on the Euro, as investors remain more focused on monetary policy cues and geopolitical risks.
EUR/USD Technical Outlook: Bulls Eye Channel Breakout
From a technical standpoint, EUR/USD broke above a Double Bottom neckline at 1.1635, hinting at a potential trend reversal. The next key resistance is at the descending channel top near 1.1670. A break above this level could open the path toward October 6 highs at 1.1730, followed by 1.1780.
On the downside, support lies at 1.1630, the neckline of the breakout pattern, followed by 1.1600. A drop below these could shift focus to October lows near 1.1542.
Currency Heat Map: Euro Gains Ground
The Euro was the strongest against the Australian Dollar (+0.23%) and also posted modest gains versus the US Dollar and Japanese Yen. Here’s a snapshot of today’s Euro performance:
| EUR vs | % Change |
|---|---|
| USD | +0.14% |
| GBP | +0.04% |
| JPY | +0.14% |
| CAD | +0.05% |
| AUD | +0.23% |
| NZD | -0.22% |
| CHF | 0.00% |
