EUR/USD (1.1195) Fails at 1.1256 on French Bond Crisis — 1.1000 Target if Spread Reaches 250bps

EUR/USD is trading at 1.1195, down 0.33% on Thursday. The pair reversed from an intraday high of 1.1256 and fell back through Wednesday’s close of 1.1237. That is a 61-pip drop from the session peak and a 42-pip loss on the day. The reversal came as the dollar recovered from its own weakness: the dollar index fell to 101.45 in Asian trading, a three-week low, then climbed back to 101.85. The euro couldn’t hold the gains it made during the dollar’s dip.

The argument of this forecast is that EUR/USD is no longer a pure dollar trade. It is pricing a euro-specific risk premium coming out of Paris. France’s 10-year government bond yield broke above 5% for the first time since 2002 and traded as high as 5.10%. The spread over German Bunds widened past 160 basis points, its widest since November 2011, with intraday prints as wide as 170. For a short time, French 10-year debt yielded more than U.S. Treasuries, something not seen in roughly a decade. When the second-largest economy in the eurozone borrows at a higher rate than Washington, the euro takes a discount that a weaker dollar alone can’t erase.

Thursday shows that clearly. A soft dollar would usually lift EUR/USD. Treasury yields fell 11.3 basis points to 5.036%, a one-month low, and the dollar index touched a three-week low. Those are textbook conditions for a euro rally. Instead, the pair rallied to 1.1256 and then sold off, because French spreads widened through the European session and dragged the whole region’s bond market with them. Belgium’s spread widened past 104 basis points, its widest since 2013, and Italy’s widened to 120 from 114.

The macro calendar makes the next week critical. The Federal Reserve decides October 28, with markets pricing a 16% chance of a hike and a 90% chance by December. The European Central Bank decides October 29 at 14:15 CET, with its deposit rate at 2.50% and markets leaning toward a hold. A sovereign credit-rating review on France is scheduled for Friday, October 23. Brent crude at $111.99 hits the euro area’s energy import bill harder than the U.S. trade balance.

The levels are clear. The pair sits 82 pips above its 52-week low of 1.1113 and 884 pips below its 52-week high of 1.2079. Resistance sits at 1.1256, Thursday’s high, and 1.1275, the top of the October range. Support starts at 1.1156, the October 12 daily fixing, and then at the 1.1113 low. If the French spread keeps widening, 1.1000 is the downside target.

France Breaks the Bond Market: OAT Yields at 5.08% and a 160–170 Basis-Point Spread Over Bunds

The French bond selloff is the main event for the euro. France’s 10-year OAT yield crossed 5% on Wednesday for the first time since 2002 and touched 5.002% early in the session before settling just below. On Thursday, the selloff extended. The yield moved above 5.10% at points and traded at 5.08% in midmorning European trading, level with the 5.09% U.S. 10-year yield at that moment. The spread over Germany’s 3.39% 10-year Bund widened past 160 basis points, reaching 163 at the 02:30 ET check, up from 152 basis points at Wednesday’s open. Intraday prints reached 170 basis points.

That spread level means something specific in euro-area history. The last time French bonds traded more than 160 basis points over Bunds was November 2011, at the height of the eurozone debt crisis. The current move has a different cause, political gridlock rather than a banking crisis, but bond investors are pricing a similar kind of risk. A wider OAT-Bund spread means investors see a meaningful gap in creditworthiness between the eurozone’s two largest economies, and that hits the single currency’s credibility directly.

The trigger is a budget standoff. Finance Minister Roland Lescure is trying to pass a 2027 budget targeting a 5% deficit through a fragmented parliament. On October 21, he said the government still has the tools to pass it, pointing to Article 49.3 of the constitution and budgetary decrees as options if lawmakers cannot agree. Using 49.3 means bypassing a parliamentary vote, which the government did to force this year’s budget through in February. A weekend of violent protests across France sharpened the political risk.

Who holds the debt matters for the euro. Non-residents own 57.5% of French government bonds. When foreign holders sell OATs, they often sell the euro along with them. That links French spread widening directly to EUR/USD selling. A domestic bond selloff can stay contained in the bond market, but a foreign-holder selloff spills into currency markets.

The contagion has started. Belgium’s 10-year spread moved past 104 basis points, its widest since 2013. Italy’s widened to 120 basis points from 114 a day earlier. European stocks fell, with the STOXX 600 down 0.8% and France’s CAC 40 down more than 1%. When spreads widen across several euro-area countries at once, the market is pricing systemic risk in the currency union rather than a single country’s problem. That makes the euro, not just French bonds, the asset under pressure.

Why the Dollar’s Weakness Failed to Lift EUR/USD: DXY Touched 101.45 Before Rebounding to 101.85

The dollar set up a rally the euro couldn’t use. The dollar index fell to 101.45 during Asian trading, a three-week low, as U.S. Treasury yields slid and the AI-led equity selloff pushed money into bonds. The 10-year Treasury yield dropped 11.3 basis points to 5.036%. The 30-year fell to 5.353%, and the 5-year to 4.864%. Lower U.S. yields reduce the dollar’s appeal, which explains why EUR/USD reached its 1.1256 high early in the European session.

Then the dollar recovered. The index climbed back to 101.85 while EUR/USD reversed through 1.1237 to 1.1195. The dollar’s bounce explains part of the euro’s drop, but not the size of it. The euro underperformed against almost every major currency on Thursday. It fell 0.99% against the yen, 0.47% against the Canadian dollar and 0.42% against the Swiss franc. The yen and franc rallied as havens, and the euro lost ground to both. That is a sign of euro-specific weakness rather than broad dollar strength.

Sterling makes a useful comparison. GBP/USD traded at 1.3405, and the pound gained 0.08% against the euro. EUR/GBP sits at 0.8387. Britain has its own fiscal problem, with 10-year gilt yields at 5.38%, but the pound held up better than the euro. Gilt yields are higher than French yields, but the market sees the U.K. as a single sovereign with its own central bank. France’s problem is harder to price because it sits inside a monetary union where the ECB’s backstop has conditions attached.

The broader dollar backdrop is mixed. The index came off 17-month highs at the start of October and has been consolidating since, holding support near 101.50 for more than a week. A break below 101.45 would normally open the way for EUR/USD to test its October highs. But as long as the euro carries a French risk premium, dollar weakness won’t translate into a clean euro rally.

For the forecast, this decoupling is the key signal. In a normal year, EUR/USD moves inversely with the dollar index almost tick for tick. This week, the euro is trading off French spreads first and the dollar second. Until the OAT-Bund spread stabilizes, EUR/USD rallies will stall even on days when the dollar is soft, and drops will run further on days when the dollar is firm.

Rate Differentials: Fed at 3.75%–4.00% Against the ECB’s 2.50% Deposit Rate

The policy gap gives the dollar a structural yield advantage. The Federal Reserve holds a 3.75%–4.00% range after its September hike. The ECB’s deposit rate is 2.50%, with the main refinancing rate at 2.65% and the marginal lending rate at 2.90%, effective since September 16. The gap between the Fed’s upper bound and the ECB’s deposit rate is 150 basis points. Investors earn significantly more holding dollar cash than euro cash, which supports the dollar through carry demand.

Longer-term rates show the same gap. The U.S. 10-year Treasury yields 5.036% and Germany’s 10-year Bund yields 3.39%, a gap of 165 basis points. That spread has held wide all year as both central banks hiked into an energy shock. The Treasury-Bund spread usually drives EUR/USD over months, and at 165 basis points it puts a ceiling on the euro.

Both central banks are tightening, but at different speeds. The ECB raised rates in June to 2.25%, its first hike since 2023, after eight cuts that took the deposit rate down from a 4.00% peak to 2.00%. It hiked again on September 10 to 2.50%, unanimously. The Fed hiked in September too, and markets price a 90% chance of another hike in December. The ECB’s 2.50% deposit rate sits at the top of its own estimated neutral range of 1.75% to 2.50%, though President Christine Lagarde said that band would not drive policy.

The next decisions come back to back. The Fed announces October 28, with a 16% hike probability. The ECB announces October 29 at 14:15 CET, with Lagarde’s press conference at 14:45 CET. As of mid-October, markets priced an 83% probability of an ECB hold. Eurozone inflation rose to 3.7% year over year in September, above expectations, but signals from Governing Council members since the September meeting have been less hawkish than Lagarde’s press conference. Members have pointed to demand destruction from high energy prices and a lack of second-round inflation effects.

For EUR/USD, the combination is euro-negative. If the Fed holds with hawkish guidance and the ECB holds without strong guidance, the policy gap stays at 150 basis points with the market pricing a wider gap by December. A hawkish ECB surprise could narrow the gap and lift the euro, but the ECB is unlikely to hike into a French bond crisis that would make tighter policy riskier for weaker members.

Brent at $111.99 and the Eurozone Energy Bill: Why Oil Hits the Euro Harder

Oil hurts the euro more than the dollar, and Thursday’s spike is adding to the pressure. Brent crude rose $3.17, or 2.91%, to $111.99 a barrel after a Houthi drone strike near Saudi Aramco’s Shaybah field. The United States is a net energy exporter. The eurozone imports most of its oil and gas. Every $10 increase in crude transfers income from European consumers and businesses to energy producers outside the bloc, which worsens the euro area’s trade balance and weakens the currency.

The 2026 numbers show the cost. Brent is up 80% this year during nine months of war between the United States and Iran. Eurozone inflation hit 3.7% in September, far above the ECB’s 2% target, and the energy shock is the main driver. The ECB’s September statement said the Middle East conflict continued to generate inflation pressure and that inflation would stay well above target for an extended period. Higher inflation from imported energy is a different problem from domestic overheating. It squeezes real incomes and growth at the same time it pushes prices higher.

Growth was holding up before this latest spike. The eurozone’s flash composite PMI rose to 52.1 in August, a nine-month high, with manufacturing output at a 54-month high and the headline manufacturing PMI at a 51-month high of 52.8. German factories led the gains on AI-related tech goods and defense demand. Employment expanded for the first time in 2026. That resilience is what gave the ECB room to hike twice.

Consumers are under more pressure. Euro-area consumer confidence stood at minus 15.5 in August, well below its long-term average and below the level before the Middle East conflict started. It had plunged to minus 16.3 in March and minus 19.0 in May before recovering partially over the summer. Thursday’s flash consumer confidence reading for October added to the euro’s weakness during the session. With Brent above $110 again, households face another round of energy costs heading into winter.

For EUR/USD, oil is the second driver behind France. The French spread explains the euro’s underperformance against other currencies. Oil explains why the euro area’s growth outlook is under pressure even as the ECB keeps rates elevated. A drop in Brent below $100 would ease both the inflation and trade-balance pressure on the euro. A move above $120 would make the ECB’s dilemma worse and push EUR/USD toward its 52-week low.

The Contagion Map: Belgium at 104 Basis Points, Italy at 120 Basis Points and the ECB Backstop Question

The spread move has spread beyond France, and that turns a French fiscal story into a euro story. Belgium’s 10-year spread over Bunds widened past 104 basis points, its widest since 2013. Italy’s widened to 120 basis points from 114 a day earlier. Six basis points of Italian widening in one session is significant for a market that had been relatively calm. When spreads widen together, investors are reassessing euro-area sovereign risk as a whole, not just French risk.

Italy is the key comparison. During Italy’s 2018 budget crisis, the BTP-Bund spread widened to 250 basis points, and EUR/USD fell sharply during the episode. If the French spread follows the same path from its current 160–170 basis-point range to 250, the move would add 80 to 90 basis points of risk premium. Using the 2018 episode as a guide, a French spread at 250 basis points maps to EUR/USD near 1.1000, 195 pips below the current price.

The ECB’s backstop is the market’s main question. The central bank has a tool, the Transmission Protection Instrument, designed to buy bonds of countries whose spreads widen without a fundamental justification. But it comes with conditions, including compliance with EU fiscal rules. France runs a deficit near 5% and has struggled to pass budgets. Whether the ECB would buy French bonds when France’s fiscal path is the problem is uncertain, and that uncertainty is part of the spread.

A sovereign credit-rating review on France is scheduled for Friday, October 23. A downgrade would add pressure on French bonds and the euro going into the weekend. An unchanged rating with a negative outlook would be read as a partial relief. The timing is tight: the review lands the day after French yields broke 5%, the week before the ECB meeting and while the budget is still being negotiated.

The political calendar adds risk beyond the budget. France holds a presidential election next spring, and civil unrest makes it harder for the government to cut spending or raise taxes. Investors buying French bonds want a credible fiscal plan, and the current parliament can’t produce one without bypassing votes. The French risk premium is therefore likely to stay elevated through at least the budget process, and with it the euro’s discount.

Technical Picture: 1.1256 Rejection, 1.1275 October High and the 1.1156 Support

The chart shows a range with a downward tilt. EUR/USD rejected 1.1256 on Thursday, a level that sits just under 1.1275, the top of the October range. The pair has failed to hold above 1.1250 several times this month, and each failure has produced a pullback toward 1.1200. Thursday’s drop to 1.1195 tests the bottom of that inner range.

The daily fixings for October show the structure. EUR/USD fixed at 1.11556 on October 12, 1.11988 on October 13, 1.11566 on October 14, 1.12216 on October 15 and 1.12404 on October 16, the best fixing of the month. It then fixed at 1.11994 on October 18, 1.12115 on October 19, 1.12373 on October 20 and 1.12334 on October 21. That puts the October range at 1.1156 to 1.1275 in fixing terms. The lows at 1.1156 on October 12 and 14 form a double bottom, and a break below it would open the 52-week low.

The bigger range is wide. The 52-week range runs from 1.1113 to 1.2079. The 2026 range runs from 1.1120 to 1.2067. The pair averaged 1.1610 from January through September and now sits 3.6% below that average. Over 12 months, EUR/USD is down 3.26%. The decline from the 1.2067 high in early 2026 to the current 1.1195 is 872 pips, or 7.2%, driven by the war, the oil shock and the Fed’s shift to hikes.

Resistance sits at 1.1237 (Wednesday’s close and Thursday’s open), then 1.1256 (Thursday’s high), then 1.1275 (the October high). A daily close above 1.1275 would break the October range and point to 1.1360 as the next target. That would require a sharp narrowing in French spreads or a dovish surprise from the Fed.

Support sits at 1.1192, an October intraday low, then 1.1156, the double bottom from October 12 and 14. Below that, 1.1113 and 1.1120 mark the 52-week and 2026 lows. A daily close below 1.1113 would put EUR/USD at its lowest level in more than a year and open the 1.1000 target from the Italy-2018 spread analogy.

Market Positioning: Range Traders Buy Dips and Sell Rallies While the Euro Lacks a Domestic Catalyst

The FX market treats EUR/USD as a range-bound pair, and traders keep buying dips and selling rallies. Neither side has shown enough conviction to force a breakout. A softer dollar has given the euro some relief this week, but the euro has no domestic catalyst for a sustained recovery while eurozone growth stays subdued and France dominates the headlines.

The range trade works until the spread breaks. As long as the OAT-Bund spread stays in the 150–170 basis-point zone, range traders can sell near 1.1250 and buy near 1.1160. A spread move beyond 170 would likely push buyers away from the lower end and turn the range into a breakdown. A spread retreat below 150 would let the euro use any dollar weakness to test the top of the range.

The dollar side of the trade is consolidating. The dollar came off 17-month highs at the start of October and has held its 101.50 support since. Its run earlier this year came on Fed hikes and haven demand during the war. Now that the 10-year Treasury yield has pulled back from 5.34% on October 1 to 5.036%, the dollar’s yield advantage is narrowing at the long end, even as the policy rate advantage stays at 150 basis points.

Futures markets give a cleaner read. Euro futures on the CME traded at 1.1249 earlier in the day, down 0.12%, before the full European-session reversal. The difference between futures and spot reflects the interest-rate differential: futures trade above spot because U.S. rates exceed euro rates. Open interest and positioning in euro futures will show whether speculative accounts are adding short positions on the French story or covering into it.

For the forecast, the range is the base case, but the risk of a break is skewed to the downside. Range trading has worked in October because no catalyst was strong enough to move the pair out of 1.1156–1.1275. The French bond selloff is a catalyst that could break the bottom. Nothing on the horizon carries the same force for the top.

The European Session Tape: CAC 40 Falls More Than 1% and the STOXX 600 Drops 0.8%

European equities confirm the euro’s weakness. The STOXX 600 fell 0.8% on Thursday, and France’s CAC 40 led the decline with a drop of more than 1% as the French 10-year yield broke cleanly above 5%. French banks, which hold large amounts of their own government’s debt, come under pressure when OAT prices fall, and that creates a link between sovereign stress and bank stress that investors remember from 2011.

The global risk backdrop adds to the pressure. U.S. stocks fell sharply, with the Nasdaq Composite down 2.18% and the S&P 500 down 1.25% midway through the session, as Meta and Tesla earnings reopened worries about AI capital spending. Asian markets had already sold off overnight, with Korea’s KOSPI down 5%. A global risk-off tone usually helps the dollar and the yen, and Thursday’s yen strength against the euro, a 0.99% euro loss, reflects that haven bid.

The bond market moved differently by country. Treasuries rallied, with the 10-year yield down 11.3 basis points. German Bunds rallied as well, with the 10-year yield at 3.39%, as investors moved from French and Belgian debt into the region’s safe asset. Gilts traded at 5.38%. France was the outlier, with yields climbing while haven bonds rallied. That split reflects the market’s view that German debt remains a safe haven while French debt has become a credit risk.

That widening between Germany and France is the core of the euro’s problem. When Bunds rally and OATs sell off, the average borrowing cost for the eurozone barely changes, but the dispersion widens. A currency union depends on investors treating member-state debt as broadly similar risk. Widening dispersion undercuts that assumption and adds a risk premium to the shared currency.

For EUR/USD traders, European equities are a real-time signal. A recovery in the CAC 40 would suggest French spreads are stabilizing and give the euro room to bounce. Further declines in French stocks, particularly banks, would signal that the sovereign stress is feeding into the financial system, which would push EUR/USD toward its October lows.

Key Dates: France’s Rating Review October 23, Fed October 28, ECB October 29

The calendar is dense. Friday, October 23 brings a sovereign credit-rating review on France, the most immediate risk for the euro. The review lands after French 10-year yields broke 5% and the spread hit its widest since 2011. A downgrade would likely push French yields higher and EUR/USD toward its October lows. An unchanged rating would ease some of the pressure, especially if the outlook doesn’t change.

October 28 brings the Fed decision. Markets price a 16% chance of a hike next week and a 90% chance by December. A hold with hawkish guidance would keep the policy gap at 150 basis points and the dollar supported. A surprise hike would widen the gap to 175 basis points and push EUR/USD lower. A dovish hold, signaling the Fed might skip December, would be the strongest bullish catalyst for the euro, but nothing in the oil or inflation data supports it right now.

October 29 brings the ECB decision at 14:15 CET. Markets priced an 83% chance of a hold as of mid-October. A hold with no clear guidance would be neutral for the euro. A hike to 2.75% would narrow the policy gap and lift the euro, but it would also raise borrowing costs for France, Italy and Belgium during a spread crisis, which could offset the rate support. Lagarde’s press conference will also be watched for any comment on French spreads and the ECB’s backstop.

The budget process in Paris runs in parallel. Lescure has said the government is ready to use Article 49.3 to pass the 2027 budget if needed. That would end the immediate budget uncertainty but at the cost of political legitimacy, and it could trigger a no-confidence vote. Each step in that process can move French spreads and the euro.

Next week’s U.S. personal consumption expenditures data and the eurozone’s October flash PMIs round out the calendar. Strong U.S. inflation would push the dollar higher. Weak eurozone PMIs, especially in France, would confirm the growth damage from the political crisis and the energy shock. Both point toward EUR/USD weakness if they surprise in the expected direction.

EUR/USD Forecast Scenarios: 1.1156–1.1275 Base Range, 1.1000 Downside Target, 1.1360 Upside

The base case is a range between 1.1156 and 1.1275 through the Fed and ECB decisions. The October double bottom at 1.1156 and the range top at 1.1275 have contained the pair all month. Expect EUR/USD to stay in that box while French spreads hover between 150 and 170 basis points, with volatility around Friday’s rating review and the back-to-back central bank decisions.

The bear case triggers if the French spread widens past 170 basis points. The likely triggers are a French rating downgrade on Friday, a failed budget vote or no-confidence motion in Paris, or contagion pushing Italy’s spread above 150 basis points. In that scenario, EUR/USD breaks 1.1156, tests the 1.1113 52-week low and heads toward 1.1000. That target sits 195 pips below the current price and matches the 2018 Italian crisis analogy at a 250-basis-point French spread. A hawkish Fed surprise would speed the move.

The bull case needs the French spread to retreat below 150 basis points. That would require an unchanged rating with a stable outlook, credible progress on the budget or a clear signal from the ECB that it stands behind euro-area bond markets. A dovish turn from the Fed or a drop in Brent below $100 would help. In that scenario, EUR/USD would reclaim 1.1256 and break the 1.1275 October high, opening a run toward 1.1360, 165 pips above the current price.

The risk-reward favors the downside. From 1.1195, the distance to 1.1000 is 195 pips, and the distance to 1.1360 is 165 pips. But the catalysts point mostly lower. France’s budget crisis, the rating review, Brent above $110 and a Fed with 90% December hike odds all weigh on the euro. A drop in French spreads is possible, but nothing in the current political situation makes it likely before next week.

Positioning should reflect the asymmetry. Selling rallies into 1.1250–1.1275 offers a better entry than buying dips in the middle of the range. A break and daily close below 1.1156 would confirm the bear case and open 1.1113 and 1.1000. Only a daily close above 1.1275 would invalidate the bearish bias.

The Medium-Term Picture: EUR/USD 3.6% Below Its 2026 Average and 7.2% Off the Year’s High

The longer view explains why the euro is vulnerable. EUR/USD averaged 1.1610 from January through September 2026 and now trades at 1.1195, 3.6% below that average. The pair hit 1.2067 at its 2026 peak before the war and the oil shock reversed it. From that high, the euro has dropped 872 pips, or 7.2%. Over 12 months, it is down 3.26%. In 2025 the pair averaged 1.1300, so the current price is below last year’s average as well.

The drivers of the 2026 decline stack up. The war pushed Brent up 80% and hit the euro area’s terms of trade harder than the U.S. economy. The Fed moved from cuts to hikes faster than the ECB, widening the policy gap to 150 basis points. French political instability added a sovereign risk premium that has now pushed spreads to crisis-era levels. Each of those forces favors the dollar.

There are offsetting factors. The eurozone economy showed more resilience than expected in the summer, with the composite PMI at a nine-month high of 52.1 in August and German manufacturing at multi-year highs on AI and defense demand. The ECB has hiked twice and kept the option for more. Eurozone inflation at 3.7% gives the ECB room to stay hawkish. And U.S. yields have fallen 30 basis points from their October 1 peak, reducing the dollar’s long-end advantage.

The medium-term question is whether the French crisis is a 2018-style episode or something longer. Italy’s 2018 crisis resolved within months once the government compromised on its budget. France’s situation is complicated by the presidential election next spring and a parliament with no stable majority. If the budget passes via 49.3 and spreads stabilize, the euro could recover toward its 2026 average. If the crisis drags into the election, the risk premium stays.

For long-horizon forecasts, EUR/USD near 1.12 prices a lot of bad news. A resolution in France, a peak in Fed hikes and a drop in oil would all point higher, toward the 1.16 average. But none of those is likely within the next few weeks. Near term, the path of least resistance is lower, with the 1.1113 low as the key line.

EUR/USD Verdict: Bearish Below 1.1275 With 1.1113 and 1.1000 the Targets as France Prices a Crisis Premium

The near-term verdict on EUR/USD is bearish. The pair trades at 1.1195, down 0.33%, after rejecting 1.1256 even as the dollar index touched a three-week low of 101.45. That failure is the clearest signal of the session. When the euro can’t rally on a soft dollar, a euro-specific problem is setting the price, and France is that problem.

French 10-year yields broke 5% for the first time since 2002 and reached 5.10%. The OAT-Bund spread widened past 160 basis points, its widest since November 2011, with intraday prints near 170. French debt briefly yielded more than U.S. Treasuries. Belgium’s spread widened past 104 basis points and Italy’s to 120. With non-residents holding 57.5% of French debt, the bond selloff is spilling directly into the currency.

The macro backdrop adds to the pressure. The Fed holds 3.75%–4.00% with a 90% chance of a December hike, while the ECB sits at 2.50% and leans toward a hold on October 29. The 150-basis-point policy gap and 165-basis-point Treasury-Bund spread both favor the dollar. Brent at $111.99 hurts the energy-importing eurozone more than the U.S. Eurozone inflation at 3.7% leaves the ECB with little room to support growth.

The forecast sets a base range of 1.1156 to 1.1275 through the Fed and ECB decisions. A daily close below 1.1156 targets the 1.1113 52-week low and then 1.1000, the level that matches a 250-basis-point French spread. A daily close above 1.1275 would open 1.1360. The deciding inputs are Friday’s French rating review, the budget process in Paris, the Fed’s October 28 decision and the ECB’s October 29 decision. Until the French spread stabilizes, rallies toward 1.1250–1.1275 are selling opportunities, and the euro trades with a crisis premium attached.

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