Euro (EUR) slipped yesterday on news that French PM Lecornu resigned after less than 1 month on the role. Pair was last at 1.1677 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

2-way trades still likely

"This is the 3rd PM after Bayrou and Barnier to leave office, since December-2024. But post-resignation, President Macron tasked Lecornu 48 hours to work on a plan for the 'stability for the country'. This feels like Macron is 'buying time' and by Wednesday, Macron has to make a choice to either appoint another PM, dissolve the National Assembly or tender his resignation (which is of low probability at this point)."

"Additionally, the Netherlands will hold General Elections on October 29. These political developments may still pose downward risk on the EUR in the near term. However, the broader fundamental outlook remains supportive of the euro, suggesting a buy-on-dips approach."

"Daily momentum is mild bearish but decline in RSI moderated. 2-way trades still likely. Resistance at 1.1745 (21 DMA), 1.1810 and 1,1920 levels (2025 high). Support at 1.1680 (50 DMA), 1.1640 levels (100 DMA, 23.6% fibo retracement of Mar low to Sep high), 1.16 (100 DMA)."