FX.co ★ Euro Hovers at $1.17 After France’s Credit Downgrade

The euro held steady at $1.17 following Fitch's downgrade of France's credit rating, reducing it from AA- to A+, marking its lowest on historical records. The credit rating agency attributed this change to political instability and escalating national debt as the newly appointed Prime Minister, Sébastien Lecornu, initiates discussions on the budget. The spotlight now turns to an intense series of central bank meetings scheduled for the week. The Federal Reserve is anticipated to implement an interest rate cut of at least 25 basis points on Wednesday, amidst ongoing discussions about its independence. This decision comes as officials assess the cooling labor market juxtaposed with inflationary pressures stemming from tariffs. Both the Bank of England and the Bank of Japan are generally expected to maintain their current policy positions. In parallel, the European Central Bank recently indicated that the phase of rate reductions might have concluded. President Christine Lagarde noted that the risks to growth have become more balanced, suggesting a transition by policymakers towards a more stable approach following a period characterized by monetary easing measures.