EUR/USD: French PM survives another day – OCBC

Euro (EUR) was a touch firmer overnight as political uncertainties in France found a breather. EUR last seen at 1.1637 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Fragile situation still warrants caution for EUR bulls

"French PM Lecornu pledged to suspend President’s Macron pension reforms, and importantly, he reversed the proposed increase in retirement age from 62 to 64. Socialist party (PS) agreed to not join efforts to topple the government. PM Lecornu faces 2 no-confidence motions and he faces a real risk of being ousted if Socialists join forces."

"Macron had indicated that any vote to topple Lecornu’s cabinet would force him to dissolve parliament and call elections. The fragile situation still warrants caution for EUR bulls in the interim though the broader fundamental outlook remains supportive of the euro, suggesting a bias for buy-on-dips approach (but requires patience)."

"Bearish momentum on daily chart shows signs of easing while RSI rose. Resistance at 1.1640 (100 DMA, 23.6% fibo), 1.1690/1.1700 (21, 50 DMAs). Support at 1.1550, 1.1460 (38.2% fibo retracement of Apr low to Sep high)."