EUR/USD is trading around 1.12, with gains capped. France's economic deterioration has become more pronounced, and some observers say it could affect economic indicators across the eurozone.
EUR/USD fell for a third consecutive day. Although the 1.12 level has held, upside remains heavy. The 21-day moving average is approaching 1.1240, but the market has shown weakness in attempts to break above it. EUR/JPY remained under pressure from yen appreciation, trading near its lowest levels since October last year and briefly falling to around ¥175.
In the eurozone's preliminary October PMI data, solid growth continued at the start of the fourth quarter outside France, but France's composite PMI fell to 48.4, making the deterioration in the French economy more pronounced. As a result, the economic weakness of France, the eurozone's second-largest economy, has drawn market attention.
Economic indicators for the eurozone as a whole are still expected to remain relatively resilient, but rising energy prices are increasing companies' costs, potentially putting continued pressure on the ECB to maintain a higher interest-rate stance. At the same time, France's weakness is making the ECB's policy decisions more difficult.
The levels indicated are 1.1198 for EUR/USD, 175.57 for EUR/JPY and 0.8372 for EUR/GBP.