No major economic events are expected today.

Moody’s decision to maintain France’s credit rating has eased one of the immediate risks facing the Euro. On Friday, the rating was kept at Aa3, although the outlook remains negative. Following expectations of a downgrade, this provides the European currency with a reason to recover. However, budgetary disagreements and high borrowing costs continue to constrain confidence in French assets.

The start of the week is also accompanied by a decline in US bond yields. This diminishes the interest rate appeal of the Dollar and supports EUR/USD. The market predominantly expects the Fed and the ECB to hold rates steady at their upcoming meetings, shifting attention toward further signals from regulators. A Fed pause in itself does not imply a refusal to hike rates in subsequent meetings.

Weak October business activity data for France serves as a reminder of the region’s economic vulnerability. Consequently, the improvement in sentiment following the rating decision does not eliminate all grounds for caution. A resurgence in US yields or renewed debt strain could bring pressure back to the Euro. As long as these risks do not escalate, the combination of local relief and a weaker Dollar supports the bullish scenario for EUR/USD.

Recommendations: BUY 1.1220, SL 1.1195, TP 1.1275.