The Euro has dropped from a high of 0.8730 on Friday to below the 0.8690 support level. This decline is fueled by news of French Prime Minister Sébastien Lecornu’s resignation, bringing the Euro closer to the 0.8665 support level. Lecornu’s resignation is the fifth Prime Minister change under President Macron within two years. This situation adds pressure to the Euro as France faces a fiscal crisis. On the technical side, the Euro is moving within a broadening wedge pattern, which often follows a peak. Indicators on the 4-hour chart show a bearish trend.

Current Euro Trading Levels

Currently, support is at 0.8675, with a trendline around 0.8665. If the Euro continues to decline, it may target the September lows at 0.8635. Resistance is found at the previous support level of 0.8665 and then near 0.8725 and 0.8730. Today, the Euro is performing best against the Japanese Yen. Percentage changes for major currencies can be seen in the heat map, highlighting significant performance and strengths. For example, the Euro has changed by 0.11% against the Yen. This map helps compare base and quote currencies for better understanding of daily currency performance. The ongoing political instability in France signals further weakness for the Euro. Traders dealing in derivatives should consider buying put options on the EUR/GBP pair, focusing on strikes close to the 0.8665 and 0.8635 support levels. This approach allows for gains from potential declines while limiting possible losses. Rising uncertainty from Paris is increasing market anxiety. We’ve noticed a sharp rise in implied volatility for one-month Euro options, which went up over 20% in just one trading session. This indicates that traders are preparing for larger price movements in the weeks ahead.

Impact of Political Turmoil

This political instability arrives at a time when France’s economic situation is already under scrutiny. Public debt recently exceeded 112% of GDP, leaving little room for financial flexibility to stabilize the situation. The resignation of the Prime Minister heightens market anxieties about the country’s financial management. We’ve seen similar patterns before, especially during the European sovereign debt crisis in the early 2010s when news from a single country heavily influenced the Euro’s value, creating profitable opportunities for those who were well-positioned. The current issues in France, the Eurozone’s second-largest economy, could have a long-lasting impact. For traders willing to take risks, selling EUR futures contracts might be an effective way to act on this bearish outlook. Setting a stop-loss at the 0.8730 level can help manage potential reversal risks. Data shows the Euro’s overall weakness, as it has declined against every major currency today except the Japanese Yen. Create your live VT Markets account and start trading now.

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