The EUR/USD pair extends its decline, trading near 1.1705 during Tuesday’s Asian session, as political turmoil in France weighs on the Euro (EUR). The resignation of newly appointed Prime Minister Sebastien Lecornu and his cabinet on Monday—just hours after the lineup was announced—has shaken investor confidence. Market participants now await Germany’s August Factory Orders and France’s Trade Balance data later in the day.
Lecornu’s abrupt departure, only weeks after assuming office, marks the shortest administration in modern French history and fuels concerns of a renewed political crisis. This instability pressures the Euro further, especially after Fitch downgraded France’s credit rating last month, with Moody’s expected to follow before October ends.
In the United States, the ongoing government shutdown raises fears about its potential impact on economic activity. The shutdown has also delayed key economic data, including last Friday’s September Nonfarm Payrolls (NFP) report, leaving traders with limited cues.
Meanwhile, the Federal Reserve (Fed) is widely expected to deliver a 25 basis-point rate cut in October amid signs of a slowing labor market. According to the CME FedWatch Tool, markets are now pricing in an 83% chance of another rate cut in December, though future decisions will likely hinge on the timing and outcome of delayed data releases.
