EUR/USD Price Forecast: Keeps bullish vibe above 1.1600 despite France’s deepening political crisis

• EUR/USD weakens to around 1.1620 in Monday’s early European session. 

• Positive view of the pair prevails above the 100-day EMA, but further downside cannot be ruled out with bearish RSI. 

• The immediate resistance level emerges at 1.1694; the first support level to watch is 1.1575.

The EUR/USD pair loses ground to near 1.1620 during the early European session on Monday. The Euro (EUR) softens against the US Dollar (USD) amid fears of political turmoil in France. France’s Socialist party leader has threatened to bring down Prime Minister Sébastien Lecornu’s government by Monday if their budget conditions are not met. 

Olivier Faure, whose party holds a swing vote in the hung parliament, said that he would file a no-confidence bill early next week if billionaires are not forced to pay more tax.  

Technically, the constructive outlook of EUR/USD remains in place as the major pair is holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, the 14-day Relative Strength Index (RSI) stands below the midline near 45.75. This indicates that further downside looks favorable in the near term. 

On the bright side, the first upside barrier emerges at 1.1694, the high of October 16. Any follow-through buying above the mentioned level could see a rally to 1.1755, the upper boundary of the Bollinger Band. Further north, the next resistance level is seen at 1.1820, the high of September 23. 

In the bearish case, the 100-day EMA of 1.1575 acts as a key support level for EUR/USD. A breach of this level could drag the major pair toward 1.1545, the lower limit of the Bollinger Band. The additional downside filter to watch is 1.1403, the low of July 31. 

EUR/USD daily chart