Euro at 17-month low, dollar near pre-Liberation Day highs
SPY•The euro fell to $1.1118, its weakest level since May 2025, as concerns about France’s public finances and bond-market sell-off weighed on the currency. The dollar index rose to 102.33, near its highest level since April 10, 2025.
1. Euro falls as French bonds sell off
The euro slid to a 17-month low against the dollar on Monday after four consecutive weekly declines. French bond-market pressure and concerns about the country’s ability to rein in its budget deficit stirred fears of a return of euro zone sovereign debt crisis dynamics.
2. French debt spreads widen
The gap between French bond yields and safe-haven German Bunds widened to about 150 basis points on Friday, its highest since the euro area’s 2011 sovereign debt crisis, before easing to 140 basis points. It was last up 5 basis points at 145.50. Strategist Hauke Siemssen said recent bond-market dynamics were “increasingly concerning” and “somewhat reminiscent” of a sovereign debt crisis.
3. Dollar firms, yen holds ground
The dollar index rose 0.39% to 102.33 after reaching 102.53, its highest since April 10, 2025. Traders priced in 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 policy in Japan and government warnings against its depreciation.
