EUR/USD is expected to climb back to the 1.1850 handle in the coming days. Thursday morning’s rally in the pair shows momentum remains tilted to the bullish side, but also that the US jobs market data continues to have an outsized impact on USD crosses, ING's FX analyst Francesco Pesole notes.

Spillover from France remains limited

"One week after France’s debt downgrading, we can conclude that the euro spillover has been very contained, despite the OAT-Bund 10y having remained quite wide (currently 80bp). Their latest political news isn’t very encouraging, as the new prime minister is facing harsh union opposition to his fiscal plans, and negotiations with the Socialists – who are believed to hold the key to passing the budget – have not yielded good results so far."

"The risk of further widening in the OAT-Bund spreads remains tangible, but what matters most for the euro is the rate of change in those adjustments, and so far we are not expecting a material FX spillover."