EUR/USD: French 10 year olds heats up

(BFM Stock Exchange) – This article, with free access, is produced by the research team in BFM Stock Exchange analysis and market strategy. To not miss any opportunity, consult all of the analyzes and discover our portfolios by accessing our privilege space.

In a bond environment which is tending on both sides of the Atlantic, moreover, the pair of Euro / dollar currencies, not without nervousness, holds its positions around 1,1650, in a thin side canal (tidy).

On this side of the Atlantic, if the German debt does not inspire for the moment little fear, it is naturally on the side of the French debt that the concerns are concentrated, even though the probabilities of falling from the Bayrou government, on September 08 following a vote of confidence, are arithmetically very high. And with it the questioning of a 2026 austere budget, including 44 billion euros in savings.

The OAT10 years heats up at 3.58%, surreptitiously exceeding 3.60% yesterday, causing a new CAC 40 reflux (-0.70% to 7,654 points). For comparison, its German counterpart is worth 2.78%, and Greek 3.52%. To the point that the nominera economists wonder: “Is France the new Italy?”, He wonders in a note.

“The next important announcement of a rating agency will be that of Fitch on September 12 (that is to say immediately after the vote of trust of September 8). However, Fitch had already supposed in its evaluation of March 14 that the Bayrou government would fail and that early elections would take place in the second half of 2025. Although there are reasons to think that a degradation on September 12 is not necessary, the fact that Fitch has already placed And that France has a notation similar to that of the United Kingdom (which we consider much less worrying both on the budgetary and political level) presents obvious risks of degradation.

Yesterday, preliminary inflation figures in the euro zone for August were on the statistical program of the morning. Regarding consumer prices, figures show slight acceleration in August, with inflation at 2.1% over a year against 2% the previous month.

On the other side of the Atlantic, it is employment, whose correlation to inflation is complex but real, which will be scrutinized in the second part of the week with a battery of indicators, and in high point on Friday the NFP (non-Farm Payrolls) report, traditional and always very followed federal report on the health of private employment (excluding agriculture) in the United States. Economists interviewed expect a slight increase in unemployment on an average of 4.3% of the active population, and 74,000 net of positions.

This “report on non-agricultural employment in the United States will provide an idea of ​​the potential magnitude of the drop in Fed rates this year. Its president, Jerome Powell, said that the labor market now prices inflation in the decisions of the central bank”, supports César Perez Ruiz, head of investments, and CIO at Pictet Wealth Management.

Bloopers learned past weekend of PCE prices across the Atlantic, Fed’s favorite measure in its appreciation of price dynamics. The publication of these retail prices has not reserved a big surprise. Over a year, the increase in the “Core” index, that is to say excluding food and energy prices, has registered 2.9%, online with the expectations of economists interviewed by the Wall Street Journal.

John Plassard, partner and head of investment strategy at Cité Gestion sees it “resilience of American households despite tariff tensions”, in an intervention on BFM Business. The scenario of a monetary softening of 25 base points of the Fed Funds largely holds the rope for the September FOMC.

A FOMC which will be followed all the more than during the Jackson Hole symposium, the boss of the powerful monetary institution paved the way for a little more flexibility. In any case, the Fedwatch tool of the CME Group is 88.2% the probabilities of a 25 -point contraction of the Fed Funds. The comments of the Fed on customs duties will also be scrutinized, when a large part of the latter have just been deemed illegal by a federal court of appeal.

The remarks made during the great annual mass of the planet’s argentiers “have not changed [les] basic perspectives [de PIMCO]”, which provides” a progressive series of rate drops – probably starting with a drop of 25 bp in September – to bring the rate of federal funds to a neutral range (3.0 % to 3.5 %), probably before the end of Powell’s mandate as president of the Fed in May 2026. ”

“In his speech, Powell has cited the growing risks of falling employment and the transitional nature of the effects of customs tariffs as reasons why the policy” could “require an adjustment – the clearest signal that it could give as to the Fed’s intention to announce a rate drop of 25 bp in September without preliminary commitment. However, he also stressed that the return to neutrality, at least during the time, progressive and would depend on inflationary pressures which would prove to be punctual. “

At midday on the foreign exchange market, the euro was treated against $ 1,1660 approximately.

Key graphics elements

The pair of Euro / dollar currencies is in the marked ascending phase, background, above an oblique right that makes sense. We have represented this linear level of graphic support in black. In the immediate future, we will keep an eye attentive to the relative positioning of the mobile averages at 20 (in dark blue) and 50 days (in orange) to optimize the entry points.

Medium term

In view of the key graphic factors that we have mentioned, our opinion is neutral in the medium term on Euro dollar parity (Eurusd).

We will keep this neutral opinion as long as the EURO Dollar (EURUSD) prices are positioned between the USD 1,1608 support and the resistance to 1,1835 USD.

Daily data graphics