EUR/USD Falls on French Political Crisis; CAC 40 Under Pressure

EUR/USD has declined 0.4% to 1.0975 as political instability in France weighs on the single currency, with concerns over government stability triggering risk-off sentiment. The French CAC 40 index dropped 1.8% amid fears of potential policy gridlock, while German-French yield spreads widened to 85 basis points, reflecting increased risk premium. The US Dollar Index strengthened 0.3% to 101.20, benefiting from safe-haven flows as European political uncertainty escalates. Market participants are pricing in a 65% probability of ECB rate cuts by June, further pressuring the euro. Technical indicators show EUR/USD breaking below the key 1.1000 psychological support, with next support at 1.0950 (50-day moving average). Resistance now stands at 1.1020. The political crisis could extend euro weakness if coalition talks fail, potentially pushing the pair toward 1.0900 in the near term.