France’s Marine Le Pen back in the presidential race as fiscal challenges loom large
The return of Marine Le Pen to the presidential race ahead of the 2027 election has injected significant uncertainty into France's political landscape, which could weigh on the euro. Per the full note from ing-think, her eligibility comes at a time when France is facing escalated fiscal challenges, potentially exacerbating tensions within the European Union. This situation arrives as market participants are navigating a consensus target for the EUR/USD to reach 1.20 by December 2026, with estimates showing a range from 1.12 to 1.26. With no immediate high-impact events on the calendar, traders should brace for volatility stemming from Le Pen's decision regarding her candidacy and its implications on fiscal policy.
What the desk is arguing
The desk believes that the political uncertainty surrounding Marine Le Pen's potential candidacy may serve as a headwind for the euro. In light of France's deteriorating fiscal outlook, this development could challenge investor confidence, especially in light of upcoming European Central Bank monetary policy decisions.
As highlighted in the commentary, Le Pen's prior conviction and modification of her sentence have reopened her path to a presidential run, with her responsiveness to her legal obligations suggesting that her candidacy is still in flux. This kind of political instability tends to create risk aversion among currency traders, thereby impacting the euro's performance.
Where it sits in our coverage
Our current consensus target for the EUR/USD stands at 1.20 for December 2026, reflecting a range from 1.12 to 1.26. Notable per-firm targets include commerzbank at 1.22 and goldman at 1.25.
This view aligns closely with the broader consensus, while the desk’s outlook and targets suggest a move toward the upper bound of expected prices, particularly with the heightened uncertainty stemming from the political arena.
How other firms see it
A number of firms express a cautiously optimistic view on the euro, including citi and nomura aligning with the idea of potential EUR strength influenced by the ECB. Conversely, citi and uob exhibit a more conservative stance.
Additionally, the trajectory of the EUR/USD is intricately linked to sentiments surrounding the ECB's policies and economic health indicators within the Eurozone. Market participants should closely monitor these developments, as shifts in fiscal perspectives can impact broader currency dynamics.
What the calendar says
With no upcoming events scheduled that could significantly impact this situation, traders need to remain vigilant for any announcements from Marine Le Pen regarding her candidacy and any subsequent implications for fiscal policymaking in France. This political development could overshadow technical drivers in the immediate term.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Marine Le Pen's eligibility increases political uncertainty, impacting investor confidence in the euro.
- 02France's worsening fiscal outlook may challenge monetary policy and the euro's strength.
- 03EUR/USD targets range widely, with consensus around 1.20 by December 2026.
- 04Traders should monitor Le Pen's decision on candidacy and its implications.
Market implications
Watch for potential volatility in the EUR/USD as traders react to Marine Le Pen's candidacy announcement, especially if it includes hints about fiscal reforms or budgetary stances. The consensus target level of 1.20 will serve as a critical threshold for potential upward moves in the euro.
Risks to this view
A reversal in our call could occur if Marine Le Pen ultimately decides not to run or if there is a significant positive shift in France's fiscal outlook, potentially bolstering confidence in the euro. Additionally, any unexpected policy shifts from the ECB could invalidate the current trajectory for the EUR/USD pair.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | — | 1.1445 |
MUFG | — | 1.1800 |
HSBC | — | 1.1050 |
All 28 desk targets for EUR/USD
Articles France’s Marine Le Pen back in the presidential race as fiscal challenges loom large 14:28 FX Rates France Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Marine Le Pen can now run for president in 2027, setting the stage for a highly uncertain campaign against the backdrop of France’s worsening fiscal outlook Charlotte de Montpellier , Benjamin Schroeder and Francesco Pesole RN parliamentary party leader Marine Le Pen leaves the Paris courthouse after hearing of the verdict in her appeal trial Le Pen can run for president, but will she? Marine Le Pen was convicted in March 2025 in a case concerning the misuse of European Parliament assistants by the former Front National. She was sentenced to four years in prison, including two years suspended, fined EUR 100,000, and barred from holding public office for five years with immediate effect.
This ruling has now been reviewed on appeal. The appeal court upheld her conviction today, but modified the sentence. She has been sentenced to three years in prison, including two years suspended, meaning that she will serve one year under electronic monitoring.
She has also been banned from holding public office for 45 months, of which 30 months are suspended. As the period of ineligibility began in March 2025, the first 15 months have elapsed. As a result, she is now officially eligible to run in the 2027 presidential election.
Nevertheless, it remains uncertain whether she will actually stand as a candidate. A few days ago, she indicated that her candidacy would depend on not being sentenced to electronic monitoring. She is expected to announce her decision this evening.
If she chooses not to run, Jordan Bardella is expected to become the presidential candidate for Rassemblement National (RN). Where does the campaign stand? The presidential campaign remains highly uncertain.
The number of potential candidates is still very large, reflecting the continued fragmentation of the French political system. French political history shows that opinion polls remain highly volatile nine months before a presidential election. Being the frontrunner at this stage does not guarantee victory.
Three leading candidates currently stand out on the centre-right and right: Édouard Philippe (Horizons), Gabriel Attal (Renaissance, the former party of Emmanuel Macron), and Bruno Retailleau (Les Républicains, representing the traditional conservative right). On the left, Jean-Luc Mélenchon has already announced his candidacy and remains the most visible figure of the radical left. Raphaël Glucksmann is regularly tested in polls as a social-democratic and pro-European candidate.
Marine Tondelier (Greens) and Fabien Roussel (French Communist Party) also feature in various electoral scenarios. What do the polls say? The most striking feature of recent polling is the RN’s lead.
The RN's candidate is generally credited with around 35% of voting intentions, well ahead of centrist candidates (typically between 15% and 20%) and left-wing candidates (around 10% to 15% for both Mélenchon and Glucksmann). Based on current polling, the RN would therefore dominate the first round of the election. However, without knowing whether some centrist or left-wing candidates will eventually withdraw to avoid splitting the vote, it is difficult to identify the RN’s likely opponent in the second round.
A run-off between the RN candidate and either Édouard Philippe or Gabriel Attal is often discussed, but a unified left rallying behind Raphaël Glucksmann could also lead to an RN–Glucksmann contest. In the coming months, two issues deserve close attention: the left’s ability to unite behind a single candidate and the competition between Édouard Philippe and Gabriel Attal for leadership of the centrist bloc. Regardless of who wins the presidential election, it is likely that the new president would dissolve the National Assembly shortly afterwards in an attempt to secure a governing majority, as the current fragmentation of parliament severely limits the scope for reforms.
If a stable majority were to emerge following both the presidential and legislative elections, visibility on France’s economic policy outlook could improve significantly compared with the current situation. But the risk that a stable majority does not emerge is quite large. What does the RN’s programme look like?
Compared with the RN of 2017, the most significant change is its transformation from a Eurosceptic party advocating a break with the European institutional framework into a party seeking to reshape the European Union from within. Proposals to leave the euro area and hold a referendum on EU membership have disappeared from its programme. Nevertheless, the party remains highly critical of European integration and of what it sees as a loss of national sovereignty.
On public finances, the RN regularly criticises European fiscal constraints, the Stability and Growth Pact, excessive deficit procedures, and austerity policies. Its argument is generally that European rules limit the French state’s ability to protect the domestic economy. The party also maintains that France’s contribution to the EU budget should be reduced.
At the same time, the RN advocates cuts to production taxes and reductions in VAT. Its position on pensions remains unclear. Marine Le Pen initially defended a retirement age of 62 and even 60 for those with long careers, while Jordan Bardella has recently suggested abandoning the focus on the statutory retirement age and instead considering only the number of years of contributions.
At this stage, the RN’s discourse is much more detailed regarding spending reallocations than regarding an explicit strategy for stabilising public debt over the long term. It is also considerably less committed to a rapid deficit reduction path than centre-right or traditional conservative parties. Overall, given the precedent set by Giorgia Meloni’s government in Italy and the RN’s efforts to appear more business-friendly by dropping references to “Frexit”, a potential RN victory is viewed by financial markets as less disruptive than in previous presidential elections.
However, the party’s programme remains highly vague at this stage, and market perceptions could change as policy proposals become more concrete. That said, even in the event of an RN victory in the presidential election, it appears unlikely that the party would simultaneously secure an outright majority in the National Assembly. The need to form a coalition government could therefore moderate some of the most controversial elements of its programme.
Public finance challenges will weigh heavily on the campaign The coming months are likely to be dominated by budgetary discussions, which are expected to be particularly difficult. This morning, the government revised down its 2026 GDP growth forecast to 0.7%, significantly below the 1.0% assumption used when the budget was drafted at the beginning of the year. As a result, the government’s objective of reducing the fiscal deficit to 5% of GDP this year from 5.1% in 2025 has become even more challenging.
Expenditure is running higher than expected due to rising interest payments on public debt and continued support measures related to the energy shock, while revenue is underperforming because of weaker economic growth. A EUR 6 billion spending cut for this year is currently being discussed, although no concrete measures have yet been identified. The 2027 budget is likely to be even more complicated given the presidential election campaign.
With no parliamentary majority currently in place, the prospects for agreement across political groups on a restrictive budget during an election campaign appear limited. Last May, the European Commission estimated that, under a no-policy-change scenario, France’s fiscal deficit would reach 5.7% of GDP in 2027, pushing public debt to 120.2% of GDP, compared with around 100% at the beginning of 2020. Charlotte de Montpellier Rates: Bond markets want to see fiscal improvements, regardless of who brings them Bond markets have shown a muted reaction to the headlines surrounding Le Pen.
One reason is that the RN has an alternative candidate in Jordan Bardella, who currently polls slightly ahead of her. Another is that markets remain primarily focused on France's fiscal trajectory. Current economic headwinds make it more difficult to bring down the deficit, and political uncertainty also muddies the trajectory for coming years.
Spreads of 10y French government bonds over their German peers have already widened back towards the 80bp mark in the past week, although the level overstates the widening somewhat given a maturity mismatch between the current benchmark bonds. Looking at an interpolated 10y spread, we are more or less at the average spread going back to when snap elections were called in June 2024, setting off the more volatile environment for French bonds. As such, we still think that markets are lacking the clarity and confidence for material relief in spreads.
Benjamin Schroeder FX: EUR/CHF the clearest barometer of renewed political risk The FX market is not currently looking at the French political and budget story. This follows a recurring script of recent years, where France-specific risk emerges as a key driver for the euro only once the bond market shows real signs of stress. For now, FX investors simply aren’t concerned about the recent widening in French spreads.
In the run-up to the April election, we expect elevated scrutiny of RN’s fiscal plans. Any headlines suggesting a looser approach to fiscal consolidation could spill over into the euro: we would expect that to become primarily visible in EUR/CHF weakness, as the franc is historically the quintessential hedge to EU risk. For the moment, our baseline assumption is that – barring a surge in support for Mélenchon – any negative euro impact in coming months will likely prove short-lived as the RN and other parties closer to the centre will be careful not to cause serious OAT volatility during the campaign.
Francesco Pesole Public finances French elections France Eurozone Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Charlotte de Montpellier Senior Economist, France and Switzerland Charlotte de Montpellier is a Senior Economist in ING Belgium covering France and Switzerland.
She joined us in February 2018. Prior to this, she worked as a research and teaching assistant at… Benjamin Schroeder Senior Rates Strategist Benjamin Schroeder is a senior rates strategist at ING in Amsterdam. Before joining ING in 2016, he worked in fixed income research at Dresdner Kleinwort and Commerzbank in Frankfurt, Germany.… Francesco Pesole FX Strategist Francesco is an FX Strategist and has been with the firm since May 2019.
His main focus is on the G10 space and, in particular, on European and commodity currencies. He began his career at Credit… In this article Le Pen can run for president, but will she? Where does the campaign stand?
What do the polls say? What does the RN’s programme look like? Public finance challenges will weigh heavily on the campaign Rates: Bond markets want to see fiscal improvements, regardless of who brings them FX: EUR/CHF the clearest barometer of renewed political risk
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