French sovereign bonds have been trading at spreads to swap rates consistent with multiple downgrades. It is no surprise then that French debt and the euro have not reacted too much to Friday evening's decision by Fitch to downgrade France one notch to A+, ING's FX analyst Chris Turner notes.

Schnabel may push EUR higher

"Locally, the focus is on how quickly, if at all, new French Prime Minister Sébastien Lecornu can focus the minds of a disparate National Assembly on the unpopular but essential path of fiscal consolidation. One of Lecornu's first moves has been to abandon plans to eliminate two public holidays. Expect FX market players to keep one eye on French debt, even though our core view is that this is not going to broaden into another eurozone crisis."

"It is not a big week for eurozone data, but there are plenty of speakers scheduled across the bloc. Our focus today is on a speech from the European Central Bank's Isabel Schnabel at 1:30pm CET. She's been sounding quite hawkish recently, describing the ECB's 2.00% deposit rate as 'mildly accommodative' and warning that central banks may end up raising rates much sooner than investors expect. Her speech is a mildly positive event risk for EUR/USD and short-dated euro swap rates today."

"Expect EUR/USD to continue trading a tight 1.1700-1750 and await its next cue from Wednesday's FOMC meeting."