We study the valence band of Eu-intercalated C60 by synchrotron radiation photoelectron spectroscopy to un-derstand the ferromagnetism (FM) and the giant magnetoresistance (GMR) of Eu6C60. The results reveal the semiconducting property and the remarkable 5d6s-π hybridization. Eu-C60 bonding has both ionic and covalent contributions. No more than half the 5d6s electrons transfer from Eu to the LUMO derived band of C60, and the LUMO+1 derived band is not filled. The remaining valence electrons of Eu, together with some π (LUMO, HOMO and HOMO-1) electrons, constitute the covalent bond. The electronic structure implies that the magnetic coupling in Eu6C60 should be through the intra-atomic f-sd exchange and the medium of the π electrons. The possibility of the GMR being tunnelling magnetoresistance is ruled out.