EUR/USD

Rabobank’s Bas van Geffen expects the European Central Bank (ECB) to keep policy unchanged at its October meeting, with the deposit rate at 2.50%, and to deliver a final hike in December. He highlights persistent upside inflation risks but notes no evidence of broad-based second-round effects.

The US Dollar (USD) was unable to maintain its recovery, coming under some modest selling pressure in the latter part of Thursday’s NA session.

EUR/USD loses 0.33% on Thursday, reversing earlier gains as the US Dollar (USD) stages a rebound after slipping to a three-week low during Asian trading hours. Meanwhile, political turmoil in France and uncertainty surrounding the country's fiscal outlook continue to weigh on the Euro (EUR).

The Euro (EUR) is walking a tightrope between French fiscal risk and a firm Federal Reserve (Fed).

Brown Brothers Harriman’s (BBH) Elias Haddad highlights that France’s deteriorating public finances are driving a sharp widening in French-German spreads, with the premium already near past crisis highs. Using Italy’s 2018 budget turmoil as a template, Haddad warns that further spread widening could pressure EUR/USD toward 1.1000, while noting that France’s 2027 presidential election may eventually restore confidence if credible deficit reduction is delivered.

The Euro (EUR) pares recent gains against the US Dollar (USD) on Thursday, as the escalation in France's bond yields and the higher Oil prices amid growing uncertainty in the Middle East prove a heavy weight for any significant recovery.