Euro at 17-month low, dollar near pre-Liberation Day highs
TLT•The euro fell to $1.1118, its weakest level since May 2025, while the dollar index rose to 102.33, near its highest level since April 10, 2025. French bond spreads widened as investors weighed France’s fiscal outlook and political uncertainty.
1. Euro weakens on France concerns
The euro fell as low as $1.1161 against the dollar on Monday after four straight weekly declines. French bond yields came under pressure amid concerns about the country’s ability to rein in its budget deficit and political uncertainty ahead of the 2027 election. The gap between French bonds and German Bunds reached 150 basis points on Friday, its widest since 2011, before easing to 140 basis points; it was last at 145.50 basis points.
2. Dollar rises, yen supported
The dollar index rose 0.39% to 102.33 after reaching 102.53, its highest since April 10, 2025. Traders priced a 78% chance that the Federal Reserve would hold rates steady in October, up from 36% a week earlier. The yen gained 0.10% to 157.67 per dollar, supported by expectations of tighter Japanese policy and government warnings about its depreciation.
