Short Positions on French Bonds Rise: Budget Battle Deepens

The increase in short positions on French bonds points to deepening budget problems and could negatively impact risk appetite. The CAC index is already in oversold territory (RSI 21.8) and has lost 1.2% over the last 24 hours. MACD is in negative territory and below the signal line, indicating weak short-term momentum. The price is trading below the 20 and 50-day moving averages, which weighs on the technical outlook. However, due to oversold conditions, some bargain buying may emerge, so I do not express a high-confidence bearish expectation.

The increase in short positions on French bonds could negatively impact risk perception in the euro area and create downward pressure on EURUSD. Technical indicators also support this outlook: RSI is in the weak zone at 43.6, MACD is below the signal line, and the price is trading below the SMA20. However, since the price is just above the SMA50, this level should be monitored as support in the short term. Combining the news flow and the technical picture, a slight downward movement can be expected in the 1-3 day perspective, but a strong bearish signal has not yet emerged.