France is going through a tense political period. On November 5th, a crucial vote of confidence will take place. The Prime Minister is in a delicate position. His centrist party has only 205 seats. Opposing him is an opposition with 340 seats. The far left and far right are united against him. It promises to be eventful.



Financial markets are already feeling the impact. French bonds are losing ground. This is surprising in a context that is relatively favorable to European debt. One wonders if this will affect the euro more broadly. It's not easy to say.

The EUR/USD is holding up for now, despite the pressure on the dollar. But other pairs like EUR/JPY and EUR/CHF could falter. The calm of recent times seems to be over.

The current positioning may be the biggest risk for the euro. Managers are holding large long positions. We could see more bearish hedges on the EUR/USD. If the support at 1.0980/90 gives way, the direction is 1.0900/0920. To be continued.
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