EUR/USD weakens to near 1.1700 on fears of French political crisis

• EUR/USD drifts lower to near 1.1705 in Tuesday's Asian session.
• French PM resigned just hours after naming a new cabinet on Sunday, sparking fresh political chaos in France.
• The Fed is expected to deliver rate cuts in October and December. 

The EUR/USD pair loses ground around 1.1705 during the Asian trading hours on Tuesday. The Euro (EUR) softens against the US Dollar (USD) after France's new Prime Minister Sebastien Lecornu and his government resigned on Monday, hours after announcing his cabinet line-up. The German August Factory Orders and French Trade Balance data are due later on Tuesday.  

Sebastien Lecornu has resigned just weeks after his appointment, making it the shortest-lived administration in modern French history. This raises fear of a fresh political crisis in France and exerts some selling pressure on the Euro. Fitch downgraded France's ratings last month, and Moody's is widely anticipated to follow suit before the end of October.

Across the pond, the ongoing US government shutdown could raise concerns over the impact on the US economy, which might drag the Greenback lower and act as a tailwind for the major pair. The shutdown is leaving a void of US economic data, with last Friday's closely watched Nonfarm Payrolls (NFP) report for September delayed along with other key releases until the government reopens.

The Federal Reserve (Fed) is widely expected to cut rates by 25 basis points (bps) at its October meeting amid signs of a weakening labor market. Financial markets are now pricing in nearly an 83% chance of an additional Fed rate cut in December, according to the CME FedWatch Tool, though this will likely depend on data released before then.