The euro weakened, reaching its lowest level since late July, as political uncertainties in France and renewed worries about a potential US-China trade war weighed on the currency. German investor sentiment improved, but not sufficiently to offset the prevailing cautious market mood.
- The euro slipped toward $1.15, its weakest point since July 31.
- Political developments in France are being closely monitored.
- Prime Minister Lecornu is working to pass the 2026 budget bill.
- The budget aims for a deficit reduction to 4.7%-5% of GDP from 5.4%.
- Concerns about a US-China trade war have re-emerged.
- Both the US and China have imposed new port fees on shipping firms.
- German investor sentiment improved in October, but missed expectations.
The performance of the euro is currently influenced by several factors that are creating downward pressure. Domestic political efforts to reduce the Eurozone’s largest deficit are underway, but a slow path toward improvement offers little immediate support. Simultaneously, escalating trade tensions between the US and China are introducing external risks, potentially disrupting global trade flows and impacting the euro area. Disappointing investor sentiment further exacerbates the situation, leading to a weaker currency and heightened market caution.