Euro Holds Trading Range
EUR/USD: 2-way risks on a daily chart – OCBC
The euro (EUR) saw a larger pullback overnight on renewed focus on French politics. The EUR/USD pair was last at 1.1649, according to OCBC FX analysts Frances Cheung and Christopher Wong.
The analysts reiterated that they had earlier cautioned FX markets have so far “ignored” the French political drama risk and warned against complacency in the near term. The risk of a French government collapse — leaving the country without a leader for weeks or even months — should not be ruled out.
Prediction markets are pricing a 96% chance that the September 8 confidence vote will fail. Recall that last year, a no-confidence vote (though not on the budget) led to the resignation of former PM Barnier.
On the daily chart, bullish momentum has faded and the Relative Strength Index (RSI) has turned lower. Analysts note that two-way trades are still likely. Despite the recent pullback, the euro remains within its recent trading range.
Key support levels are at 1.1620 and 1.1570, the latter coinciding with the 23.6% Fibonacci retracement of the rally from the March low to the July high. On the resistance side, 1.1655/65 (21- and 50-day moving averages), 1.1750, and 1.1830 (the 2025 high) are seen as key hurdles.
Despite short-term political headwinds, OCBC analysts believe this factor is unlikely to have a lasting impact on the euro, with broader fundamentals still supportive. As such, a “buy on dips” strategy remains attractive for traders.