The euro is trading near its weakest level since May 2025 in the run-up to the European Central Bank’s interest rate meeting later Thursday, with options and technical signals pointing to the risk of further losses.

The euro was down 0.2% at $1.1134 as of 8:54 a.m. in London as longer-dated options pricing showed traders are the most bearish on the currency since March 2025. France’s fiscal challenges and fresh political risks in the region have put the euro on track for its worst two-month performance since late 2024.

ECB officials are forecast to keep interest rates unchanged as they try to gauge the inflationary impact of high energy prices and slowing economic momentum. Expectations for future hikes by the Federal Reserve are also bolstering the appeal of the dollar versus the common currency.

The euro-dollar currency pair “has shown it’s not yet ready to break below 1.11,” said Francesco Pesole, a currency strategist at ING Groep NV. “We don’t expect today’s ECB risk event to trigger a major leg lower.”Still, technical momentum could add pressure, potentially pushing the euro to a fresh 17-month low.

The so-called fear-greed indicator, which measures the ratio of buying strength to selling strength, has remained bearish for the longest stretch since January 2025. The current run is also the third-largest cumulative bearish episode in the past six years.

A key barometer of market positioning and sentiment suggests concern over France is structural and reflected more strongly in longer-term wagers. While one-week risk reversals show traders have become less bearish on the euro in recent sessions, one-year risk reversals indicate the premium for euro downside continues to widen.

Short-term bearish options structures have been unwound lately, according to FX traders familiar with the transactions who asked not to be identified because they aren’t authorized to speak publicly. The traders also cited selling interest below the $1.11 level.