Political instability and missed fiscal targets are raising doubts about France’s ability to meet EU rules and avoid further rating downgrades. The path ahead looks highly uncertain, ING's FX analyst Chris Turner notes.

Rate spreads remain EUR/USD supportive

"However, sovereign upgrades for Spain and Portugal are offsetting the French news, and the global glass-half-full environment is keeping the euro bid. EUR/USD is pretty close to resistance at 1.1800/1830 now. The most likely trigger for a breakout would be tomorrow night's Fed – but let's see if it happens earlier."

"In the eurozone today, we'll receive updates on the ZEW investor sentiment surveys. These might nudge higher on the back of the positive equity environment seen this summer, but look unlikely to be a market mover. But rate spreads remain EUR/USD supportive as the market increasingly concludes that the ECB is done cutting at 2.00%, while the Fed has another 125-150bp of easing to deliver."