21 October 2025,06:09
Daily Market Analysis New
21 October 2025, 06:09
*France Downgraded: S&P Global cut France’s sovereign rating to AA- from A+, citing rising fiscal risks and government instability.
*Euro Under Pressure: The downgrade triggered renewed selling in the euro, as investors reassessed the region’s credit outlook and political cohesion.
*ECB Commentary: Bundesbank’s Nagel signals a “wait-and-see” stance on interest rates, while Schnabel reiterates the euro’s strong global position.
Market Summary:
The euro faced sustained selling pressure as political and fiscal instability in France continued to weigh on investor sentiment. S&P Global Ratings’ downgrade of France’s long-term sovereign rating to AA- has amplified concerns over Europe’s second-largest economy. The cut marks the second downgrade by a major agency in just over a month — following Fitch’s September move — and may force institutional investors bound by high-grade mandates to trim French bond exposure.
Prime Minister Sebastien Lecornu narrowly survived a parliamentary challenge last week but only after conceding to suspend President Emmanuel Macron’s pension reform, raising doubts about the government’s ability to deliver fiscal discipline. The downgrade has added another layer of risk for the euro, which remains sensitive to broader eurozone growth and budgetary concerns.
Elsewhere, ECB officials struck a cautious tone. Nagel said the central bank can afford to stay in “wait-and-see” mode on rates, while Schnabel emphasized the euro’s structural strength. Still, weak German PPI data highlighted ongoing disinflation trends, keeping euro bulls on the defensive.
Looking ahead, investors will monitor speeches by Lagarde, Lane, and other ECB policymakers, as well as updates from Washington and Beijing that could sway global risk sentiment.
Technical Analysis
EUR/USD, H4:
EUR/USD continues to trade under pressure, extending losses after breaking below its moving average line. MACD indicates strengthening bearish momentum, while RSI at 48 stays below the midline, suggesting continued downside bias.
If weakness persists, the pair could test the next support level at 1.1585, followed by 1.1470. Conversely, a rebound above resistance at 1.1710 could trigger a short-term corrective move toward 1.1815.
Resistance Levels: 1.1710, 1.1815
Support Levels: 1.1585, 1.1470
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