France’s Debt Burden and High Energy Costs Fuel Political Pressure; Euro Slips; October Fed Hold Now Priced at 84% Probability; Tech Futures Recover After Heavy Losses; Crude Oil Retreats From Resistance
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- France’s debt, energy costs, and worsening unrest are putting the Euro under renewed pressure. More than half a million people joined demonstrations on Saturday over high living costs and deteriorating public services, with violence continuing in Paris on Sunday. The protests complicate the minority government’s attempt to deliver €54 billion of fiscal savings in its 2027 budget.
- France’s public finances leave little room for an easy response. Public debt reached approximately €3.6 trillion, or 119% of GDP, in the second quarter, while this year’s deficit is projected at 5.4% of GDP. High fuel prices are intensifying public anger just as rising borrowing costs make additional government support harder to finance. French 10-year yields have approached 5%, so the spread over German Bunds remains an important gauge of whether political unrest is becoming a broader financial-market problem.
- The Euro has weakened as a result of France's problems, but the initial move is modest. EUR/USD slipped towards 1.1225 during today’s Asian session, while French government-bond futures and European equity futures also declined. The immediate transmission mechanism is through confidence in French debt rather than the demonstrations alone. The longer-term bearish EUR/USD trend remains in place, but the pair is still well above last week’s low near 1.1150. Trend traders who have remained short throughout the bullish retracement will be pleased.
- The US Dollar has steadied after a softer week. The Dollar Index is near 101.83, recovering slightly as the Euro falls. The greenback lost ground last week as traders reduced expectations of another immediate Fed hike, showing that a weaker Euro does not necessarily mean the Dollar is resuming a strong advance against every major currency.
- Markets now strongly expect an October Fed hold. Futures imply approximately an 84% probability of unchanged rates at the 27–28 October meeting, leaving only about a 16% chance of a hike. On Friday, Fed Chair Kevin Warsh said the hotter inflation reading had not materially changed his outlook, while offering no explicit guidance on this month’s decision. This has substantially reversed the initial hawkish repricing after last Wednesday’s CPI release.
- US stock futures are rebounding off hours after another technology-led selloff. S&P 500 futures are up around 0.8%, while Nasdaq-100 futures have gained approximately 1.3% during Asian trading. However, Friday’s cash session was weak: the S&P 500 fell about 1.1%, and the Nasdaq Composite lost roughly 2.1%. Today’s futures recovery is therefore not a fresh bullish breakout, but a bounce following substantial losses.
- Crude oil has eased from a four-week high after rejecting key resistance, in the case of WTI this level is just below $100. Brent is down approximately 1.7%–1.8% towards $108, while WTI futures are around $97.60. The decline follows US sanctions relief affecting Russian energy exports and indications that Middle East supply is holding up despite renewed fighting. The price remains highly sensitive to geopolitical headlines.
- WTI’s earlier $87.68 support level remains intact. The market has moved substantially higher since testing that area, with the more immediate spot-chart support now around $93.56 in WTI. That improves the short-term bullish structure, but it does not remove the risk of a sharp decline if additional supply or credible diplomatic progress reduces the geopolitical premium.
- Bitcoin has made a bullish turn, rejecting the key support level and major round number below, at $80,000 to trade above $82,000, while Ethereum remains weaker. Bitcoin is near $82,100 and Ether around $2,420 this morning. Bitcoin’s recovery preserves the possibility of further consolidation, but it remains well below the former breakout threshold around $87,293. Ethereum is still beneath the previously identified $2,544 support, leaving its technical picture less convincing. However, many trend traders, including me, are still long of Bitcoin.
- Gold has opened the week higher. The metal is near $4,180, helped by reduced expectations of an October Fed hike. However, it has not yet established a sustained recovery above $4,200, so the bounce remains tentative rather than a confirmed bullish reversal. However, it is worth noting that it is breaking out above the upper trend line of the descending price channel which has held the price action during the past six weeks.