The euro loses ground as France’s budget crisis puts EURUSD under pressure

Rising French government debt and higher eurozone inflation have triggered a decline in the EURUSD pair, with the rate currently standing at 1.1182. Discover more in our analysis for 5 October 2026.

EURUSD forecast: key takeaways

• Investors are concerned about France’s high level of government debt
• Eurozone consumer inflation rose to 3.8% in September
• EURUSD forecast for 5 October 2026: 1.1135

Fundamental analysis

The EURUSD forecast takes into account that the fundamental backdrop remains negative for the euro, with key factors including France’s budget problems, rising inflation in the eurozone, and the continued appeal of US dollar assets. The pair continues to decline sharply and is testing 1.1182.

Investors are concerned about France’s high level of government debt and political uncertainty ahead of the 2027 elections. These factors fuel concerns about the stability of the European debt market and drive additional demand for the US dollar as a safe-haven currency.

Eurozone consumer inflation rose to 3.8% in September from 3.2% a month earlier, while core inflation increased to 2.5%, driven primarily by high energy prices. Against this backdrop, the regulator had already raised the interest rate to 2.50% on 10 September, citing persistent inflationary pressure caused by the conflict in the Middle East. Accelerating inflation now increases the likelihood of further monetary policy tightening.

US job growth in September was weaker than expected, while data for previous months was revised downwards. The market now estimates the probability of the Fed keeping rates unchanged in October at around 78%, compared to about 36% a week earlier.

Fundamental analysis for 5 October 2026 takes into account that accelerating inflation formally supports expectations of further ECB tightening, but France’s budget problems and rising European bond yields are currently exerting greater pressure on the single currency. At the same time, a weaker US labour market has reduced the likelihood of a Fed rate hike in October. If the US economy continues to slow, the dollar’s advantage may gradually diminish, but for now European fiscal risks are limiting EURUSD’s recovery potential.

Technical outlook

On the H4 chart, the EURUSD rate formed a Shooting Star reversal pattern near the middle Bollinger Band. At this stage, the price may continue the downward wave as the signal plays out, with the downside target at the 1.1135 support level. A breakout below this mark would open the door for continued bearish momentum.

At the same time, today’s EURUSD forecast also suggests an alternative scenario. The price may form a correction and test the 1.1225 resistance level before declining.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: bearish
• Key resistance levels: 1.1225 and 1.1305
• Key support levels: 1.1135 and 1.1080

EURUSD trading scenario for today

Trading scenario (Sell Stop)

A breakout below the 1.1135 support level would signal another downward wave and create conditions for opening short positions.

• Current price: 1.1182
• Entry level: 1.1135
• Take profit: 1.1080
• Stop loss: 1.1160
• Risk-to-reward ratio: more than 1:2

The trade idea is valid until 8:00 AM on 6 October 2026 (server time, UTC+3).

Risk factors

The main risk to the bearish EURUSD scenario remains a possible weakening of the USD and stronger expectations of monetary policy easing by the Federal Reserve.

Summary

The decline in eurozone economic indicators is putting pressure on the euro. EURUSD technical analysis suggests a decline towards 1.1135 after a possible correction.

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