• The EUR/USD forecast points south as market participants worry about political stability in France.

• The French Prime Minister has called for a confidence vote in early September.

• The dollar rebounded on Wednesday as concerns about the Fed’s independence eased.

The EUR/USD forecast points south as market participants worry about political stability in France. Meanwhile, the dollar recovered from a recent collapse as worries about the independence of the Fed eased.

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The French Prime Minister has called for a confidence vote in early September that could lead to another collapse in the government. The news led to a collapse in government bonds as traders worried that it would mean instability and no budget by the end of the year. As a result, the euro has faced downward pressure.

“What is key is whether or not we will be able to have a budget by the end of the year,” said AXA chief economist Gilles Moec.

On the other hand, the dollar rebounded on Wednesday as concerns about the Fed’s independence eased. On Monday, Trump ordered the firing of Fed Governor Lisa Cook, which led to a collapse in the greenback. The move escalated tensions between Trump and the Fed. At the same time, traders grew concerned about the future of the central bank. Such a move could mean a more political Fed in the future with no independence.

EUR/USD key events today

Traders are not anticipating any high-impact economic releases from the US or the Eurozone. Therefore, market focus will remain on France’s politics.

EUR/USD technical forecast: Bears aim for the 1.1550 support level

On the technical side, the EUR/USD price trades below the 30-SMA, with the RSI under 50, suggesting a bearish bias. The decline comes after bulls failed to keep the price above the 1.1700 key resistance level. 

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EUR/USD has maintained a sideways move after the trend reversed near the 1.1400 support level. Bulls took over and started making higher highs and lows. However, they were unable to continue the rally past the 1.1700 resistance. Since then, the price has chopped through the 30-SMA with no clear direction. It made another failed attempt when the bulls made a strong green candle.

Currently, bears are eyeing the 1.1550 support level. A break below will allow the price to retest the 1.1400 support and start a new downtrend.

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