Euro Slips Under Pressure as Bears Hold Key Averages

Key Moments

Euro Dips as French Turmoil and Fiscal Concerns Drag Sentiment

EUR/USD is under pressure in early Wednesday trading in Europe, hovering near 1.1225. The Euro (EUR) is losing ground against the US Dollar (USD) as political unrest and fiscal worries in France erode confidence in the currency.

Market participants are watching for comments from several European Central Bank (ECB) officials later in the day, including President Christine Lagarde, Philip Lane, Joachim Nagel and Piero Cipollone, for potential guidance on policy and the economic outlook.

France Boosts Security Ahead of New Protests

According to Reuters, France is preparing an extensive security deployment for further protests planned on Saturday, reinforcing police with military support after acknowledging shortcomings in its response to violence the previous weekend. French Prime Minister Sébastien Lecornu stated that new curfews would be imposed “where the situation requires it.”

“The worries in France are not going away anytime soon,” said Tommy von Brömsen, FX strategist at Handelsbanken. “The bearish view on France will stay for a while longer, and there’s much more euro weakness to be priced in,” Tommy added.

Fed Chair Warsh Stays Cautious Ahead of Future Decisions

On the US side, last week the Federal Reserve (Fed) Chair avoided signaling whether further interest rate increases will be necessary or when they might occur.

“I don’t prejudge meetings,” said Warsh during the IMF annual meeting in Bangkok. “I don’t believe in saying now what I might do at the meetings that we have in the balance of this year,” he added.

UOB Sees EUR/USD Confined to Sideways Range

Strategists at UOB Group continue to view EUR/USD as locked in a consolidation phase in the near term. Revisiting their assessment from last Friday, when the spot rate stood at 1.1215, they reiterated that the Euro “has likely entered a range-trading phase, and for the time being, it is likely to trade between 1.1160 and 1.1280.”

UOB maintains “the same view for now,” indicating a preference for expecting range-bound price action instead of a strong directional move.

Warsh Highlights Investment and AI While Maintaining Hawkish Tone

Fed Chair Warsh delivered remarks described as moderately positive but still guarded. The FXS Speechtracker score registered at 5.6/10, slightly below the historical norm of 6.1/10, signaling a balanced message. His comment about being “over-scarred from the global financial crisis” points to a continued emphasis on risk management and financial stability, even as he notes structural growth dynamics and an investment upturn linked to “good policies” and declines to commit on future FOMC outcomes.

Warsh underscored the role of artificial intelligence as a near-term driver of demand and as a tool to enhance data reliability, referencing plans for an AI field hearing and new Federal Reserve task forces. This forward-looking stance could, over time, influence expectations for the Dollar if productivity and inflation trends evolve.

The FXS Fed Sentiment Index was unchanged, moving 0.00 points and remaining at a relatively high reading of 127.51. This indicates that the market continues to perceive the Fed’s policy stance as firmly hawkish, despite Warsh’s reluctance to pre-commit on future actions. The combination of a flat FXS Fed Sentiment Index and a slightly softer FXS Speechtracker score suggests that investors do not see a material change in the Fed’s reaction function, with Warsh’s crisis-conscious tone and focus on financial stability reinforcing views of a vigilant, data-dependent approach rather than a clear shift toward easing.

Key EUR/USD Technical Levels

On the daily chart, EUR/USD retains a negative short-term structure while trading beneath both the 20-day Bollinger simple moving average and the 100-day simple moving average (SMA). The pair is also below the upper Bollinger band, underscoring a broader downside configuration. The 14-day Relative Strength Index stands at 39.6, which is in bearish territory but not yet oversold, signaling ongoing selling pressure rather than signs of capitulation.

On the downside, the low at 1.1185 from October 19 is the first notable support. Below that, the lower Bollinger band at 1.1115 is the next level to watch. A sustained break under 1.1115 would expose the 1.1000 psychological handle, followed by the May 12, 2025 low at 1.0951.

On the upside, initial resistance is aligned with the 20-day Bollinger SMA near 1.1252, ahead of the upper Bollinger band around 1.1390. A move through that zone would then turn attention to the 100-day SMA at 1.1460 as the next key barrier.