Euro faces political, fiscal reckoning as it hovers near 17-month low
FXE•The euro hovered near a 17-month low, pressured by concerns about French debt and political gridlock and Spain’s upcoming snap election. It traded at $1.1220 as the dollar drew support from elevated U.S. Treasury yields.
1. Euro under pressure
The euro ticked lower to $1.1220 in early Asian trading Tuesday after reaching its lowest level since May 2025 in the previous session. It extended a 1.2% decline from the prior week, as concerns about France’s high debt and political gridlock weighed on the currency and Spain’s upcoming snap election added pressure.
2. Dollar gains support
The dollar rose as U.S. Treasury yields scaled multi-decade highs overnight. The dollar index stood at 102.16 after reaching an 18-month high in the previous session; the dollar also edged up to 157.92 yen, while sterling slipped 0.02% to $1.3222.
3. Rate outlook
Expectations for a Federal Reserve rate hike this month eased after weaker-than-expected U.S. jobs data, but investors still expected further tightening later. September U.S. services activity slowed, while strong domestic demand stretched supply chains and lifted input prices, suggesting inflation could remain high into next year.
