Euro ticks up as USD selling continues unabated, but France's debt concerns limit gains

• With the USD subdued near a multi-week low, EUR/USD draws renewed buying interest on Friday.
• Lower US bond yields and expectations of unchanged Fed interest rates put pressure on the USD.
• While geopolitical tensions could contain USD declines, France’s debt crisis could restrain the Euro’s advance.

Trading around 1.1225, EUR/USD remains within its week-long range as fundamental signals offer a mixed picture. Nevertheless, Friday’s Asian session brings further buying interest, extending the overnight recovery from below 1.1200.

Below the 5% threshold, the benchmark US Treasury yield reached its lowest level in over a month as investors shifted from Artificial Intelligence (AI) and technology shares into safe-haven government bonds. Recent comments from US Federal Reserve (Fed) officials have also indicated that interest rate increases are not urgent. Together, these factors leave the US Dollar (USD) languishing near the three-week low reached on Thursday, providing a key source of support for EUR/USD.

Last week’s US inflation data, however, reinforced market expectations of an imminent Fed rate increase. Traders assign around an 80% probability to a December rise in US borrowing costs, according to CME Group’s FedWatch Tool. Inflation concerns linked to volatile oil prices also support the prospect of additional Fed tightening. Alongside unease over the Middle East, this could contain further declines in the safe-haven US dollar.

Fresh US attacks could lead Tehran to invade neighbouring countries and target bases used for US military operations under its new offensive strategy, Iran’s Islamic Revolutionary Guard Corps (IRGC) said in the latest developments. Its statement follows a report that the US and Israel have prepared detailed plans for renewed strikes on Iran. The geopolitical risk premium therefore remains firmly in place, potentially discouraging fresh bearish positions in the USD.

France’s severe sovereign debt and political crisis could also continue to weigh on the single currency, limiting EUR/USD gains. For the next meaningful catalyst, traders await flash PMI releases from the Eurozone and the US. Attention will chiefly centre on the outcome of the two-day FOMC meeting that begins next Tuesday, alongside key US economic releases: the Advance Q3 GDP report and the Personal Consumption Expenditures (PCE) Price Index.

EUR/USD holds within its range on the daily chart

EUR/USD Retains a Bearish Near-Term Bias

Below both the 50-day Simple Moving Average (SMA) at 1.1437 and every key Fibonacci retracement of the 1.1116–1.1710 advance, EUR/USD retains a bearish near-term outlook. Initial resistance stands at 1.1256, the 23.6% Fibonacci retracement. Beyond that lies a closely packed resistance zone spanning the 38.2% retracement at 1.1343 and the 50.0% retracement at 1.1413, with the 50-day SMA at 1.1437 adding to the barrier.

Above this zone, resistance at the 61.8% level of 1.1483 and the 78.6% retracement of 1.1583 comes before the cycle high of 1.1710. Should EUR/USD fall further, the Fibonacci anchor at 1.1116 offers the only nearby structural support, where buyers may try to stem the decline.

(The technical analysis of this story was written with the help of an AI tool. Know more.)