EUR/USD Drops Below 1.12 Despite Relief in French Sovereign Bond Yields

EUR/USD retreated below 1.12 to trade near 1.1180 as surging Dutch TTF natural gas prices approached €100/MWh. The euro struggled to capitalize on temporary relief across European sovereign debt markets, which followed Moody's decision to affirm France's Aa3 rating with a negative outlook rather than issuing an immediate downgrade. The rating affirmation initially eased borrowing costs, pushing France's 10-year yield down to 4.973% and narrowing the 10-year OAT swap spread by 8 basis points to 147 bps. Markets now await upcoming policy decisions from the ECB and Federal Reserve.