The French crisis hit the euro and stock indices
Unrest in France has become a problem for investors as well. Damaged stores, business restrictions, and political uncertainty have added reasons to sell European stocks. On October 19, the French CAC 40 lost 1,11%, while the German DAX — 1,18%.
France is preparing for a new wave of protests. Authorities announced increased security ahead of demonstrations on October 24 following unrest that affected Paris, Lyon, Marseille, and other cities. The curfew helped restore calm, but the threat of further business disruptions remains.
On the markets, tension coexists with recovery attempts. #CAC40 is trading around 7,850.0 points, #DAX30 at 25,416.3 points, EURUSD at 1.1223. Buyers have recovered part of the losses, but French risks continue to limit interest in European assets.
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Businesses will have to pay for the consequences
Damage to stores, forced closures, and recovery costs have already caused losses for companies. New protests could prolong this period: even operating retail outlets lose customers if people avoid city centers.
For the French economy with weak growth, this is an additional burden. Uncertainty can cause companies to delay investments and hiring, while the government will have to negotiate budget decisions amid public discontent.
The situation is also unfavorable for the euro. Political tension in one of the largest economies in the eurozone hinders confident capital inflow. At the same time, the weakening of the dollar supports EURUSD, and expectations of ECB decisions remain significant. Therefore, the French crisis is restraining the pair's recovery, but does not rule out short-term rallies.
Why this matters for #DAX30
France is a significant market for German manufacturers. A reduction in orders and consumer spending could affect suppliers from Germany. Moreover, political tension could reduce interest in European stocks as a whole.
However, the German market is supported by corporate earnings and external demand. A weaker euro also helps exporters. Therefore, #DAX30 may recover faster than the French index, even if the situation in France remains difficult.
Where sellers maintain an advantage
According to FreshForex analysts, the French crisis will continue to restrain the recovery of #CAC40 and the euro. For #DAX30, the main risk remains the spread of cautious sentiment to the European market.
As long as #CAC40 remains below 7 870–7 900, a retest of 7 800 with a possible further decline to 7 750. For EURUSD, failed attempts to hold above 1,1240–1,1260 will maintain the probability of a return to 1,1200, and then — 1,1150.
For #DAX30, the nearest level is — 25 400. A move below it will increase the likelihood of a pullback to 25 300–25 200. Holding above 25 400, on the contrary, will allow buyers to continue the recovery to 25 500.
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