French Unrest Widens Bond Spreads and Pressures EUR/USD Toward 1.1200

EUR/USD is under downside pressure and testing key support at 1.1200 as French political unrest widens sovereign risk premiums. The French-German 10-year yield spread has widened back toward 145 basis points from around 85 basis points in early September. French two-year yields climbed to 3.603% and 10-year yields reached 4.812%, driven by violent protests, political fragmentation, and a 5.4% budget deficit. Benchmark German 10-year yields held steady at 3.412%. The pair trades below its 100-day and 200-day moving averages ahead of Moody's French credit rating review on October 23.