Market Update: EUR/USD Movement

The EUR/USD pair has climbed for the fourth consecutive session, trading around 1.1710 during Asian hours on Friday. The euro is gaining traction following a successful no-confidence vote for the French government. Prime Minister Sébastien Lecornu’s promise to pause critical pension reforms received backing from some left-leaning lawmakers, which likely contributed to the euro’s rise.

Alongside this political development, a dovish stance from the European Central Bank (ECB) is also supporting the euro. The outlook from the ECB suggests that interest rates are expected to remain steady. Edward Scicluna, a policymaker at the ECB and governor of Malta’s central bank, expressed that the bank shouldn’t act hastily in cutting rates. He mentioned that the impact of increased trade tariffs on inflation is uncertain, emphasizing caution before drawing any conclusions.

In his remarks, ECB Governing Council member Martin Kocher stated they might have reached the end of the rate-cutting phase, or are quite close to it. He cautioned about staying prepared in case a crisis emerges.

On another front, the ongoing U.S. government shutdown is set to continue into the following week. The Senate failed yet again to pass a Republican bill aimed at extending funding and resolving the deadlock, marking the tenth unsuccessful attempt on Thursday. This situation has dragged on for 16 days now.