19.10.202612:37 Forex-elemzések és áttekintések: Riots in France put EUR back under pressure: protests, budget, and opposition converge

Today, the euro plunged at the start of the week, and European equity indices fell with it. Futures on European stocks and on French 10-year bonds moved lower, the single currency weakened versus most G10 peers, and a flight to safety returned to US Treasuries. The trigger was unrest in France that over the weekend spread across the country.

Protests against the rising cost of living drew more than half a million people and escalated into looting and arson. Public buildings, shops, and restaurants were damaged. In a televised address on Sunday Emmanuel Macron promised a hard line against the rioters and called the events a national disgrace. He acknowledged public anxiety over fuel price rises amid the US–Iran war but said the country needed order. Clashes with police in Paris continued even during the address.

The damage is significant. According to Carrefour and the French trade federation, recovery from the riots will cost hundreds of millions of euros. About 1,500 retail outlets were affected, and roughly 20 Carrefour supermarkets were looted. Five unions have already announced a strike for November 5 demanding higher wages and more funding for public services, and they have called on pensioners and students to join. Pollster Elabe warned that such extreme violence could recur and that nothing comparable has appeared before a presidential election in recent history. That matters because the market had treated street protests as background noise rather than a budget risk.

This has come at a very inconvenient time for France. The divided National Assembly last week began debating the 2027 budget, which aims to cut the deficit by about €43 billion (roughly $48 billion). Tension over French finances has been rising since early October. Many analysts have already compared the French bond scare to the specter of a eurozone debt crisis. The economy remains weak: business activity has contracted for eight months, and inflation accelerated to 3.1% in September.

The opposition's stance makes the budget even harder. Opposition parties, as noted earlier, are unlikely to compromise with Macron's outgoing administration ahead of the 2027 elections. An early-October poll suggested Marine Le Pen and Jean-Luc Melenchon would reach the second round. Today both sides used the unrest to attack each other. Le Pen said the country had become hostage to violence and impotence and accused Melenchon's party of normalizing violence. Melenchon blamed police provocations while distancing himself from the rioters. With the far right and the far left trading accusations and the center focused on order, finding a majority for painful austerity measures will only get harder.

For FX markets, this chain is not new. The euro has long weakened on similar events in France. In early October EUR/USD hit a May-2025 low largely because of the French budget and government stability concerns. JPMorgan then called the euro vulnerable to further selling. I have repeatedly argued that France is becoming a headache for the euro, and if the situation worsens—especially around the budget—downward pressure on the single currency will grow even while attention is fixated on US Treasuries and the dollar. Today's move confirms that.

The problem is not limited to France. Looting and unrest occurred over the weekend in Milan, protests took place in Belgium and Portugal, and at least six European countries face elections next year. All that suggests pressure on the euro will persist in the coming weeks. I lean toward the view that until the first real budget votes, the November 5 strike, and further street actions, political risk will keep the euro on a short leash, and any rebound will be capped by news from Paris. If authorities cannot show the budget will pass and restore order, I would not rule out a fresh wave of selling in the euro and European stocks, and even a cautious ECB tone will not protect the currency.

Technical picture for EUR/USD

Buyers now need to think about reclaiming 1.1235. Only that would allow targeting a test of 1.1265. From there one can reach 1.1310, but doing so without support from large players will be difficult. On the downside, I expect serious buying only around 1.1195. If nobody shows up there, it would be sensible to wait for a new low near 1.1155 or to open longs from 1.1115.

Technical picture for GBP/USD

Pound buyers need to take the nearest resistance at 1.3340. Only that would allow targeting 1.3370, above which a breakout will be fairly difficult. The far target is the 1.3400 area. On a decline, bears will try to seize control of 1.3310. If they succeed, a break of the range would deal a serious blow to bulls and push GBP/USD to a low near 1.3275 with scope to reach 1.3340.