Quick overview

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The EUR/USD pair records slight losses around 1.1616. The US dollar (USD) is supported against the euro (EUR) by markets hoping for a compromise in the US-China trade war.

The French government unveiled Prime Minister Sebastien Lecornu’s new cabinet, leaving the majority of high-level positions unaltered at a time when opponents are calling for a political change to gain their support for urgent budget negotiations.

The technical outlook for EUR/USD is positive since the major pair is well-supported above the crucial 100-day Exponential Moving Average (EMA).  The Relative Strength Index (RSI) is below the midline at 43. This suggests that additional downside cannot be ruled out anytime soon.

The French situation might limit the common currency’s short-term gains.
Despite his promise to form a cabinet of “renewal and diversity,” Lecornu, who was reappointed prime minister last week after a 27-day previous term, retained his selections for the majority of the key positions.

It’s unclear if Lecornu’s new cabinet will appease critics. In a tense vote before the end of the week, the far-right National Rally and the hard-left France Unbowed (LFI) both announced that they would file a motion of no confidence on Monday. The Socialists are keeping their options open in the meantime, as the government would most likely need their support to survive such a vote.

Roland Lescure, a close ally of President Emmanuel Macron, was reappointed as finance minister by Lecornu, whose previous cabinet lasted only 14 hours. In the days ahead, the government must formally present a budget that must navigate a dangerously divided parliament, many of whom are now aiming to unseat Macron in 2027. Lecornu also retained Justice Minister Gerald Darmanin and Foreign Minister Jean-Noel Barrot. Darmanin wrote on X, “I make decisions based on a single imperative: to serve my country and the French people.”

Thus, I am taking a break from all partisan activities without denying any of my beliefs. Bruno Retailleau, the leader of the conservative Republican Party and a potential presidential candidate, was replaced by Laurent Nunez, the head of the Paris police, and the most notable change to the ministerial selections.

The low of 1.1657 recorded on September 26 serves as the first key resistance level. If there are follow-through purchases above this level, the next target could be the high of 1.1758 reached on October 3. Further north, there is additional resistance at 1.1820, which corresponds to the high from September 23.