EUR/USD

The US Dollar (USD) has navigated an inconclusive range, struggling to reverse the weekly correction, while market participants continued to assess developments from the geopolitical landscape, all amid a steady pre-Fed lull.

Antje Praefcke at Commerzbank highlights that political and rating risks in France, plus cautious European Central Bank (ECB) expectations, weigh on the Euro (EUR) but are largely priced in. Markets now see an ECB hike in December and more tightening next year, which may be revised lower.

The Euro (EUR) ticks lower against the US Dollar (USD) on Wednesday, giving back some of the ground taken over the last few days.

Francesco Pesole at ING highlights renewed pressure on French bonds, with the 10-year OAT-Bund spread nearing early October highs as budget worries and social unrest weigh on sentiment.

Commerzbank’s Antje Praefcke notes that the Dollar faces limited upside in coming days as markets await the Federal Reserve and ECB meetings next week. A December Fed hike is priced in, but no further tightening is expected by Commerzbank. With only second-tier US data and Middle East risks not adding fresh support, Praefcke expects relatively stable EUR/USD and sees little reason for significant Dollar gains.

The EUR/USD pair trades on a softer note near 1.1225 during the early European trading hours on Wednesday. French turmoil and fiscal concerns weigh on the Euro (EUR) against the US Dollar (USD).