EUR/USD holds near 1.1660 as France faces political uncertainty - BBH

EUR/USD remains heavy near 1.1660 as France's political gridlock deepens. President Emmanuel Macron has given outgoing Prime Minister Sébastien Lecornu until Wednesday to secure a governing platform, but failure to meet the October 13 budget deadline risks another temporary extension under Article 49.3. While the turmoil remains contained to France, EUR/USD support at the 100-day moving average (1.1627) is being closely watched, BBH FX analysts report.

EUR/USD supported above 1.1627

"EUR/USD is trading heavy near 1.1660. French President Emmanuel Macron gave outgoing Prime Minister Sebastien Lecornu until Wednesday evening to conduct 'final negotiations' with political parties 'in order to define a platform for action and stability for the country.' Macron will then have to choose between either appointing another prime minister or call a new parliamentary election."

"In the meantime, the October 13 deadline to submit a draft 2026 budget to the National Assembly is unlikely to be met. This means Article 49.3 will ultimately have to be invoked to temporarily extend the 2025 budget until the 2026 budget is passed - as was done for the 2025 budget."

"France's political turmoil remains country-specific and not systemic as Eurozone periphery bond yields spreads to Germany are contained. We expect EUR/USD to hold above its 100-day moving average (1.1627). If this level gives way, the next support is offered at 1.1575."