EUR/USD spent the week pinned by French politics, energy risk, and a hawkish-leaning Fed narrative — and research tone turned more bearish as the week progressed.
Early in the week, several analysts argued the euro was oversold: positioning was very short, rate spreads looked supportive, and a postponed French budget vote removed one bearish catalyst. Multiple forecasts still pointed to 1.15–1.20 over the next 12–18 months, premised on a structurally overvalued dollar and markets over-pricing Fed hikes.
But by Thursday and Friday, the published consensus shifted more defensively. Widening French OAT-Bund spreads (around 174bp, with 200bp flagged as a pain threshold), rising European gas prices, and expectations of a hawkish Fed under Kevin Warsh led several desks to cut near-term targets toward 1.11, 1.10, even 1.08 in H1 next year. One high-conviction bearish view put "fair value including OAT spreads" near 1.07.
A contrarian thread noted that tech-credit stress plus falling Treasury yields has historically weakened the dollar — a potential offset worth watching.