Depending on the basket, between 52% and 85% of EUR/USD’s drop from the 21 August summer high to 1.1204 on 5 October was the dollar rising against the other G10 currencies. I split the fall on the ECB’s own reference rates while the headlines blamed France. The last week was different: mostly the euro’s own, in windows that held France’s budget, Spain’s election call and a cut in what the market expects from the ECB. My call, after another fall on 7 October, is EUR/USD near 1.1175 on 30 October, barely off the 1.1177 it traded at as the ECB set its fix that day and close to the forward, with no lean either way. Nothing that leans lower clears chance.
EUR/USD Eyes 1.1175 as Dollar Strength Outweighs France’s Debt Fears
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Key Points:
- Between 52% and 85% of EUR/USD’s 4.2% fall from 21 August to 5 October came from the dollar rising against the other G10 currencies.
- The last week was mostly the euro’s own: from the 30 September fix it did 62% to 72% of a 1.3% fall, on France’s budget day and Spain’s election weekend.
- Moody’s reviews France on 23 October. In the week after eleven big three decisions on France, the euro’s own part fell a median 0.15%, an ordinary week by my count.