EUR/USD slips below 1.16 as Dollar gains on renewed US-China trade woes, French turmoil

• EUR/USD falls 0.41% to 1.1571 as Trump revives tariff threats before softening tone toward China.
• French PM Lecornu faces a no-confidence motion after reappointment, adding to Eurozone political stress.
• Traders eye key speeches from Fed Chair Powell and ECB President Lagarde for policy guidance this week.

EUR/USD drops during the North American session on Monday, down 0.41% as the US Dollar (USD) trims some of its Friday losses spurred by US President Donald Trump's threats to impose additional duties on Chinese products. The pair trades at 1.1571 at the time of writing after hitting a daily peak of 1.1630.

Greenback regains strength amid tariff threats; French political instability weighing on the Euro

The US Dollar is recovering, after an episode of an escalation of the trade war between the US and China, which witnessed Trump threatening to impose additional tariffs of 100% on China's goods, effective November 1. The retaliation was a response to China's increasing restrictions on rare-earth and imposing port fees on US ships.

On Sunday, Trump backpedaled, posting on this Truth Social account, "Don't worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn't want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!"

Consequently, EUR/USD opened Monday's session with a lower tone, diving below the 1.1600 figure amid the ongoing political turmoil in France, after President Emmanuel Macron reappointed Sébastien Lecornu as Prime Minister.

Lecornu has formed a new cabinet, but opposition leaders Marine Le Pen and Eric Ciotti have already put up a no-confidence motion aimed at toppling Lecornu's government.

Uncertainty about France could keep the Euro pressured and extend the US Dollar gains versus the shared currency. This, despite the ongoing central bank divergence, suggests that further upside in the EUR/USD pair is seen.

The weekly economic docket will feature speeches by the Federal Reserve (Fed) Chair Jerome Powell and the European Central Bank (ECB) President Christine Lagarde.

Daily market movers: Greenback's advance outweighs the Euro, despite Fed dovish comments

• The US Dollar Index (DXY), which tracks the performance of the buck's value against a basket of six currencies, rallies 0.35% to 99.24, a headwind for the shared currency.
• Philadelphia Fed President Anna Paulson advocates for additional rate cuts, arguing there are rising risks in the jobs market. She said, "Labor market risks do appear to be increasing - not outrageously, but noticeably. And momentum seems to be going in the wrong direction," so that now deserves to be the focus of policy.
• Besides Lagarde's speech on Thursday, the economic docket in the Eurozone will feature Germany's Harmonized Index of Consumer Price (HICP) figures and ECB's Mario Cipollone speech on Tuesday.
• Last week, the UoM Consumer Sentiment eased slightly to 55 from 55.1, exceeding forecasts for deterioration. The same survey showed that inflation expectations for one year edged lower from 4.7% to 4.6%, and for a five-year period, steadied at 3.7%.
• The poll showed that sentiment declined amongst Democrats. Overall, consumers were pessimistic about future personal finances, and conditions for buying durable goods were unfavorable.
• Money markets are fully pricing in a 25-basis-point rate cut at the Fed's October 29 meeting, with odds at 97%, according to the Prime Market Terminal probability tool.

Technical outlook: EUR/USD tumbles below 1.1600, eyes on 1.1550

EUR/USD turned short-term bearish after slipping beneath the 100-day Simple Moving Average (SMA) at 1.1633 and the 1.1600 mark. Last Friday, the Relative Strength Index (RSI) drifted below the neutral 50 level, suggesting that downside momentum is gaining steam.

Key support lies at 1.1550, followed by 1.1500, with a break below exposing the August 1 cycle low around 1.1391. On the upside, resistance is seen at 1.1600, 1.1650 and 1.1700. A decisive move above 1.1700 could pave the way for a test of 1.1800 and the July 1 high at 1.1830.