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EUR/USD slid below 1.13 as French 2027 budget rattled markets

The French-German 10Y yield spread hit a new post euro crisis high after the budget presentation, while Fed hike odds for October fell below 30% and the October hike pricing moved toward 20%.

Reported · Written up by our desk · Major Pairs

European market turmoil spilled into FX after France unveiled its 2027 budget bill aimed at cutting its deficit to 5% of GDP, Action Forex reported.

Following the announcement, the spread between French and German 10-year yields rose to a new post euro crisis high, and Action Forex said the EUR/USD pair continued to slide below 1.13.

The same market stress weighed on interest rate expectations, with Action Forex noting that the 2-year EUR swap saw its largest decline since April, as pricing for an October rate hike dropped to just 20%.

Action Forex also cited that the probability of a Fed hike in October fell below 30%, down from about 70% a week earlier, alongside US and European data including August headline PCE at 3.4% year over year and core PCE at 3.0% year over year.

Latest closeEUR/USD 1.133 ▼0.3%

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