Euro gives back gains as French fiscal worries and a firmer dollar return

The euro gave back its early Friday gains as the dollar rebounded from Thursday's pullback. FXStreet reports that EUR/USD remains on track for a fifth straight weekly decline, with concerns over France's fiscal outlook still weighing on the single currency.

That marks a shift from the relief mood that followed Trump's pledge to hold off on Iran strikes. According to Investing.com, the dollar was set for a fourth straight week of gains even as it trod water in Asian trade.

Reference point: the ECB fixing

The ECB reference rate for EUR/USD on 9 October 2026 was 1.1206, up 0.18% from 1.1186 on 8 October. That fixing captured the earlier euro bounce, not the later reversal FXStreet describes. On the same fixing, AUD/USD rose 0.54% to 0.6981 and USD/MXN climbed 1.04% to 18.2000. Chart: EUR/USD.

Yields, oil and gold

The investingLive European session wrap said bond market nerves eased "for now". It put US 10-year Treasury yields up 2 basis points at 5.25%, WTI crude down 0.9% at $90.68 and gold up 1.1% at $4,180. Gold erased its weekly losses after Trump ruled out attacks on Iran before the midterm elections, the outlet said. For background on why the yen tends to gain in moments like this, see our sister site's explainer on safe-haven currencies and the Iran headlines.

US data: sentiment misses, inflation expectations rise

The University of Michigan's preliminary October sentiment index fell to 46.3 against 47.8 expected and 48.1 prior, investingLive reports. Current conditions dropped to 44.7 versus 51.0 expected. One-year inflation expectations rose to 4.7% from 4.6%, and five-year expectations to 3.5% from 3.4%. investingLive called the headline increasingly unreliable but said the inflation expectations figures are still worth watching.

Central banks and rate pricing

A weekly roundup from investingLive shows markets pricing hikes across most major banks by year-end:

• BoE: 35 bps, with an 86% probability of a hike at the next meeting
• RBNZ: 33 bps, 59% probability of a hike next meeting
• Fed: 25 bps, 80% probability of no change next meeting
• BoC: 21 bps, 74% probability of no change next meeting
• ECB: 21 bps, 81% probability of no change next meeting

FXStreet said NZD/USD traded around 0.5605, up 0.06%, with Fed hike bets capping its recovery.

On France, Rabobank's Maartje Wijffelaars argued most spread widening may be over, because France is seen as too big to fail and ECB tools exist, per FXStreet. She stressed that Paris needs a credible budget.

Yen, loonie and yuan

• Commerzbank's Volkmar Baur said Japanese investors' net selling of US bonds has given the euro some support against the dollar, FXStreet reports.
• Citi sees limited upside for EUR/JPY amid intervention expectations, according to Investing.com. USD/JPY fixed at 158.25.
• RBC's Claire Fan noted Canada lost 68,000 jobs in September, mainly in public sectors, per FXStreet. She expects the unemployment rate to edge lower through 2026.
• The PBOC set its USD/CNY reference rate at 6.7330 versus an estimate of 6.6973, investingLive reports.

What to watch next

1. France's 2027 budget. Rabobank says a credible plan is needed, and euro sentiment remains tied to it.
2. Poland's final September CPI on Wednesday. ING expects it to confirm headline inflation at 4%, per FXStreet.
3. India's September inflation. DBS expects a rise to 5.7% from 4.8% and sees the RBI keeping a December hike open, FXStreet reports.
4. US inflation expectations. The rise in the Michigan measures keeps Fed pricing in focus. Chart: Dollar index.