The Euro (EUR) is gaining momentum due to changes in French politics and rising tensions between the US and China affecting the US Dollar (USD). Currently, the EUR is at 1.1570, and FX analysts are keeping a close eye on it. French politics has become more complicated with the reappointment of Lecornu as Prime Minister after a short resignation and a cabinet reshuffle. This situation creates uncertainty, as the new government must reach budget agreements to prevent no-confidence votes. Additionally, the upcoming Dutch elections could put more pressure on the Euro in the near term. Still, the overall outlook for the Euro is positive, suggesting a cautious buy-on-dips strategy. Technically, there is ongoing bearish momentum on the daily chart, but the Relative Strength Index shows a possible rebound from oversold conditions. Resistance levels are at 1.1640 and 1.1690, while support levels are found at 1.1550 and 1.1460. Analysts expect the EUR/USD to trade between 1.1550 and 1.1680 in the short term. The FXStreet Insights Team offers valuable market observations, combining various analyst insights for a complete analysis. The Euro is finding support around 1.1570, mainly because tensions in US-China trade last week weakened the dollar. The US Commerce Department’s new technology export restrictions led to a 0.5% decline in the dollar index (DXY) from its October high. This pressure is temporarily stabilizing the EUR/USD pair. However, political uncertainty in Europe is limiting any significant gains for now. The reappointment of the French Prime Minister has not strengthened the fragile government, and the Dutch general election on October 29 poses a major risk. Recent polls show a tightening race between establishment and populist parties, making traders cautious and likely to weigh on the Euro in the next two weeks. Despite these political challenges, the broader economic outlook supports a buy-on-dips strategy. The Eurozone’s flash manufacturing PMI for September, released last week, was at 50.8, indicating modest economic growth. This resilience suggests that any politically driven dips to the 1.1550 or 1.1460 support levels could be good buying opportunities. For derivative traders, this environment suggests strategies that can profit from a wide but contained range. With implied volatility increasing ahead of the Dutch election, selling options strangles with strike prices outside the expected 1.1550-1.1680 range could be beneficial. This strategy earns profits if the pair remains within these limits after the political risks ease following the election. A similar situation occurred in the summer of 2024, when political concerns in a member state caused a temporary dip in the EUR/USD before economic fundamentals took over again. This historical context highlights the need for patience. Using the strong support near 1.1460 as a guide can help navigate the expected short-term volatility.

here to set up a live account on VT Markets now