Euro retreats amid France political drama

EURUSD turned lower and trades below 1.1620, drawing closer to the 1.1600 support area, after being capped around 1.1650 on Thursday. The euro’s upside attempts remain frail, as France’s political uncertainty keeps investors on their toes.

France’s outgoing Prime Minister Sébastien Lecornu calmed markets on Wednesday, stating that President Emmanuel Macron would announce a new PM in the next 48 hours and dismissing the opposition calls for new elections as, he said, there is no majority in the parliament for that.

In the US, the government shutdown enters its eighth day with a lack of progress to restore funding, while news from the Federal Reserve is the main fundamental driver amid the absence of key economic data releases.

The minutes of the last Fed meeting confirmed on Wednesday the bank’s challenges to fine-tune its monetary policy, with employment weakening and inflation risks skewed to the upside.

Later on Thursday, more Fed policymakers, including Chairman Jerome Powell, will provide further clues about the bank’s monetary policy plans. However, in the absence of key economic data, they are unlikely to change the market consensus of two more interest rate cuts in the remaining monetary policy meetings this year.