FX.co ★ Euro Rebounds on French Political Stability and US Rate-Cut Hopes

The euro resurged to over $1.16 after previously falling to a two-month low of $1.154 earlier this week. This rebound comes as investors responded positively to indications of political stabilization in France, while also considering the increasing likelihood of U.S. interest rate cuts. French Prime Minister Lecornu addressed the parliament, expressing his support for delaying pension reforms until after the 2027 presidential election. This move aims to gain Socialist party support and withstand crucial no-confidence votes scheduled for Thursday. In the United States, Federal Reserve Chair Jerome Powell noted continued weaknesses in the labor market, reinforcing the anticipation of another rate reduction this month. This expectation of a dovish policy contrasts with the European Central Bank's (ECB) predictions, which suggest interest rates are unlikely to change. Additionally, tensions in U.S.–China trade relations have escalated. President Trump indicated the possibility of Washington cutting certain trade ties with China. In response, both countries have implemented additional port fees on each other’s shipping firms, following Trump's threat to impose 100% tariffs on Chinese imports and Beijing's stricter regulations on rare earth exports.