EUR/USD Holds 1.1250 as French Bond Jitters Meet Central Bank Week

The euro is trading around 1.1245 after a period of consolidation, finding modest support despite ongoing pressure from French fiscal concerns. French 10-year bond yields climbed above 5% for the first time in 24 years, reflecting investor unease over political gridlock and the difficulty of bringing the budget deficit under control. Weekend unrest across France has underscored the challenge facing policymakers as they attempt to pass the 2027 budget. The lower house vote on the revenue side of the bill is expected to attract numerous amendments from both left and right, making market acceptance uncertain even if the bill passes. The budget may continue to bounce between chambers into early December.

Despite the French headwinds, the euro has shown surprising resilience. Market participants note that correlations with natural gas prices and broader bond market jitters have weakened over the past two weeks, suggesting much of the negative news may already be reflected in current levels. The dollar, meanwhile, continues to trade with a soft undertone, weighed by concerns over stretched long positioning and recent unwinding of short-term overvaluations. The DXY dollar index has declined to its lowest level in three weeks near 101.50.

What the calendar says

Two central bank decisions will dominate the days ahead. On 28 October at 18:00 UTC, the Federal Reserve announces its policy decision. Markets see only a small chance of a rate hike at that meeting, with the next increase expected in December. One day later, on 29 October at 12:15 UTC, the European Central Bank decides rates. The ECB is likely to leave its benchmark rate unchanged at 2.5%, though a hike is all but priced in before year-end. Current market pricing shows odds of 55–60% for a hike at the November meeting, and any shift in that expectation will move EUR/USD meaningfully.

Technical outlook

The hourly chart shows EUR/USD consolidating just below 1.1250 after stabilising from recent weakness. On the daily timeframe the pair remains capped by the 100-day moving average, keeping the near-term bias bearish even as downside momentum eases. The Relative Strength Index sits around 42, below the neutral 50 line but no longer oversold, suggesting the sharp selling pressure has abated without yet reversing.

Immediate resistance appears at 1.1276, the 6 October high, with further overhead barriers at 1.1372 and the more significant 100-day average near 1.1455. Reclaiming that latter level would be needed to lift the broader bearish tone. On the downside, initial support lies at 1.1185, the 19 October low, followed by 1.1120. The key psychological level to watch is 1.1000. Heavy option expiries at 1.1305 may encourage range-bound behaviour ahead of the central bank meetings.