The euro fell to its weakest level in 17 months on Monday as a deepening fiscal crisis in France rattled bond markets and raised fears of contagion across the euro zone. The currency dropped to $1.1161 in Asian trading — its lowest since May 2025 — extending a fourth straight weekly decline, Reuters reported.
French bonds under pressure
The selloff follows a rout in French government bonds. The premium investors demand to hold French 10-year debt over German bunds shot above 150 basis points on Friday, and French 10-year yields climbed last Thursday to their highest since 2002. Markets are worried that France's budget troubles could spill into a broader euro-zone debt crisis, echoing the turmoil of the 2010s, and some traders are beginning to price in the possibility of European Central Bank support for French debt.
Politics and the dollar
Political gridlock in Paris ahead of France's April 2027 presidential election is a key driver of the unease. The euro was last down around 0.68 percent at $1.1176. The dollar, meanwhile, drew support from elevated US Treasury yields even as soft US jobs data dented expectations of a near-term Federal Reserve rate hike.
For a currency bloc still carrying the scars of its last sovereign-debt crisis, the French fiscal drama is a reminder of how quickly politics can become a market event. Whether the ECB will be forced to act remains the question traders are now asking.
Sources: Reuters, Reuters
French bonds under pressure
The selloff follows a rout in French government bonds. The premium investors demand to hold French 10-year debt over German bunds shot above 150 basis points on Friday, and French 10-year yields climbed last Thursday to their highest since 2002. Markets are worried that France's budget troubles could spill into a broader euro-zone debt crisis, echoing the turmoil of the 2010s, and some traders are beginning to price in the possibility of European Central Bank support for French debt.
Politics and the dollar
Political gridlock in Paris ahead of France's April 2027 presidential election is a key driver of the unease. The euro was last down around 0.68 percent at $1.1176. The dollar, meanwhile, drew support from elevated US Treasury yields even as soft US jobs data dented expectations of a near-term Federal Reserve rate hike.
For a currency bloc still carrying the scars of its last sovereign-debt crisis, the French fiscal drama is a reminder of how quickly politics can become a market event. Whether the ECB will be forced to act remains the question traders are now asking.
Sources: Reuters, Reuters
