Dutch International: The French budget is a "time bomb" for the Euro.

The strategist from the Netherlands International Group stated that the anxiety surrounding how France will control its expanding budget deficit is reappearing in the financial markets and may begin to weaken demand for the euro. The euro against the US dollar touched its lowest level in a month on Tuesday, as the minority government in France proposed significant deficit control measures, including cancelling two public holidays, leading to a resurgence of political tension. Currency strategist Franceso Pesole noted that while exchange rate dynamics are mainly driven by the US dollar, US inflation data is pushing the dollar higher, but it is also sending a warning to investors about the political and fiscal challenges facing the Eurozone's second largest economy. In his report, he stated, "France's deficit issue has recently been in the background, but yesterday's situation may serve as a reminder that it is still a 'time bomb' threatening the market sentiment in the EU. Over the next few months, we may begin to see the overflow reaction of this issue in the foreign exchange market."