The euro has come under renewed pressure from several factors at once. Investors are concerned about the state of France’s public finances, the US dollar remains strong thanks to high US Treasury yields, while expectations for the ECB’s future policy remain mixed.
The spread between the yields on 10-year French and German government bonds recently exceeded 150 basis points — the highest level since 2011. This is a worrying signal for the market: investors are demanding an increasingly higher premium for holding French debt, while political difficulties surrounding the budget are adding to uncertainty.
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EURUSD fell below 1.12
On October 5, EURUSD briefly fell to 1.1160 — its lowest level since May 2025. On the morning of October 6, the pair recovered to around 1.12, but pressure on the euro remains. On the one hand, concerns over France’s debt continue to deter investors. On the other, the dollar is supported by US Treasury yields, which remain near multi-year highs.
At the same time, the situation is not limited to France. Eurozone inflation accelerated to 3.8% in September, so the possibility of further ECB rate hikes remains and could support the euro. For EURUSD to stage a sustained reversal, the market would need a combination of several factors: stabilization of French debt, lower US yields, or stronger expectations of a more hawkish ECB policy. Until that happens, the 1.10–1.11 area remains the main downside target, while a sustained move above 1.12 would be the first sign that sellers are losing momentum.
#CAC40 remains under the most pressure
The French stock market is reacting much more strongly to the situation than the broader European market. #CAC40 is trading around 7,846 points after falling from levels above 8,100 at the end of September. Attempts to recover are currently meeting sellers in the 7,850–7,900 area.
As long as the index remains below 7,900, downside pressure persists. A renewed decline and a sustained break below 7,800 points would confirm that investors are continuing to reduce their exposure to French assets. For the outlook to improve significantly, #CAC40 needs to return above the 7,900–8,000 zone.
#ESTX50 is holding up better for now
The pan-European #ESTX50 is trading around 6,253 points and continues to look more resilient than the French market. After falling to around 6,210–6,220, the index managed to recover, suggesting that investors currently view the problems primarily as French rather than as a full-scale debt crisis across the entire eurozone.
However, the margin of safety is narrowing. If #ESTX50 falls back toward 6,200 and fails to hold this level, the French problem could begin to look like a broader European factor. In that case, pressure on EURUSD could intensify alongside further declines in European stock indices.
According to FreshForex analysts, the most likely scenario at present remains further downside in EURUSD and continued pressure on European equities. As long as the pair remains below 1.12, the main target remains the 1.10–1.11 area. For #CAC40, weakness below 7,900 keeps the risk of further declines elevated, while 6,200 is the key level for #ESTX50.
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