Fx daily tipping point

Key arguments

• French debt sell-off broke the narrative of ever-higher short-term rates and raises policy-error risk for the ECB more than the Fed.
• EUR/USD broke to new 2026 lows and is biased to 1.1100/1120, if not closer to 1.10, with shallow upside corrections expected.
• DXY broke above 101.80 to a new 2026 high and looks biased to 102.85, helped by resilient US activity and high energy prices.
• We prefer low-beta CEE currencies, specifically the Czech koruna, and see EUR/CZK having peaked.

Corresponding source evidence

1. Perhaps adding to the correction lower in US rates were comments from Fed Vice Chair Philip Jefferson echoing remarks from John Williams earlier in the week that the Fed should not rush into back-to-back rate hikes.
2. Consensus expects around an +85/90k headline gain, an unemployment rate remaining low at 4.1% and a healthy average earnings figure near 3.1% year-on-year.
3. Given very low growth in the US labour force, we doubt a downside disappointment in the headline number will weigh heavily on US rates or the dollar.