Euro hits 17-month low against US dollar amid French budget fears

The euro dropped to its lowest level in 17 months against the US dollar on Monday, pressured by growing concerns over France's ability to rein in its budget deficit and a sharp sell-off in French bonds, which heightened fears of a worsening eurozone sovereign debt crisis.

The euro slipped 0.37% to $1.1211 after falling as much as 0.8% to $1.116, its weakest since May 2025, marking losses for the fourth consecutive week.

French government bonds came under pressure as political uncertainty intensified and expectations for interest rates shifted, widening the yield spread between French and German bonds to around 160 basis points—the highest since the eurozone debt crisis in 2011.

Meanwhile, the US dollar index rose 0.26% to 102.16, supported by concerns over the eurozone and US economic data pointing to persistent inflationary pressures.

Market data showed expectations for a US Federal Reserve rate hike in October fell to 23.8%, down from 70.9% a week earlier, while the probability for a December hike stood at 86.8%. The dollar also gained 0.09% against the Japanese yen to 157.97 yen.