Euro Weakens Below 1.1250 Amid French Fiscal Concerns and Hawkish Fed Signals

The EUR/USD pair continued its downward trend in Friday's Asian session, dipping to near 1.1235 as concerns over France's fiscal trajectory weighed on the Euro.

French government bond yields retreated after reaching their highest level since 2002 following the release of the country's 2027 budget, which deepened fears about its fiscal outlook.

The market is not pricing in a hawkish Federal Reserve, according to Prashant Newnaha, senior rates strategist at TD Securities, who stated that the current move is a 'flight-to-safety' driven by European developments.

Hawkish signals from Fed officials, including Dallas Fed President Lorie Logan's call for at least 50 basis points in rate hikes, have supported the Greenback. Markets are pricing in nearly a 24.9% probability of a Fed rate hike in October and an 79.4% odds of an increase in December.

The US September employment data will be crucial in determining the future direction of interest rates, with traders awaiting the release to gauge the health of the labor market.