Euro falls to 17-month low against dollar on French fiscal concerns
In short
The euro dropped to a 17-month low against the U.S. dollar, touching $1.1161 on Monday, its weakest since May 2025, as concerns over France's public finances and a sharp selloff in French government bonds drove investors toward the greenback. The euro recorded its fourth consecutive weekly decline. French general government debt rose to EUR3.596 trillion, or 119 percent of GDP, at the end of the second quarter of 2026, according to INSEE.
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The euro fell to a 17-month low against the U.S. dollar on Monday, touching $1.1161, its weakest level since May 2025, as concerns over France's public finances and a sharp selloff in French government bonds pushed investors toward the greenback, Reuters reported. The state news agency put the intraday low at $1.116 and said the currency was down 0.37 percent at $1.1211. [ 1 , 2 ]
The decline extended a run of four consecutive weekly losses for the single currency, which shed 3.1 percent over that period, the longest weekly losing streak since May 2025, according to the state news agency. The dollar index rose, with one report citing a 0.39 percent gain to 102.33 after touching 102.53, its highest since 10 April 2025, and the other a 0.26 percent rise to 102.16 after the same peak. [ 1 , 2 ]
The dollar's advance came despite a weaker-than-expected U.S. labour-market report on Friday that sharply reduced expectations the Federal Reserve will raise interest rates again at its October meeting, the business outlet reported. Instead, unease over France's fiscal trajectory became the dominant force in European currency trading, with French sovereign bonds selling off sharply last week. [ 1 ]
The yield premium investors demand to hold French 10-year debt over equivalent German Bunds reached around 150 basis points, the widest since the euro-area sovereign debt crisis in 2011, before pulling back, according to the business outlet. France's general government debt rose to EUR3.596 trillion at the end of the second quarter of 2026, equal to 119 percent of GDP, up from 117.5 percent in the first quarter, official statistics agency INSEE said, with debt increasing by EUR59.6 billion over the three months. Net government debt reached 111.4 percent of GDP, and Banque de France expects the budget deficit to remain elevated. [ 1 ]
The state news agency framed the bond-market sell-off as fuelling fears of a potential sovereign debt crisis in the eurozone, a characterisation the business outlet did not use, describing the pressure instead as market stress over a difficult fiscal backdrop in the euro area's second-largest economy. [ 1 , 2 ]
Why it matters
A sustained euro decline and a widening French bond spread touch the currency and debt markets that the UAE's trade and financial sector track closely. If France's fiscal trajectory keeps driving European asset prices, borrowing costs and dollar-linked pricing can shift for businesses and investors well beyond the euro area, though the documents do not quantify any effect on the region.
Key facts
- The euro fell to $1.1161 on Monday, its lowest level since May 2025, a 17-month low. [ 1 ]
- The euro was down 0.37 percent at $1.1211 after falling as much as 0.8 percent to $1.116. [ 2 ]
- The single currency recorded its fourth consecutive weekly decline, losing 3.1 percent over the period. [ 2 ]
- France's general government debt rose to EUR3.596 trillion at the end of the second quarter of 2026, equal to 119 percent of GDP, up from 117.5 percent in the first quarter. [ 1 ]
- French debt increased by EUR59.6 billion during the three months to June, and net government debt reached 111.4 percent of GDP, according to INSEE. [ 1 ]
- The yield premium investors demand on French 10-year debt over German Bunds reached around 150 basis points, the widest since the 2011 euro-area debt crisis, before pulling back. [ 1 ]
- The dollar index rose, with the move coming despite a weaker-than-expected U.S. labour-market report that reduced expectations of another Federal Reserve rate increase in October. [ 1 , 2 ]
Confirmed by several sources
- The euro fell to a 17-month low against the dollar, its weakest level since May 2025. [ 1 , 2 ]
- The euro recorded a fourth consecutive weekly decline against the dollar. [ 1 , 2 ]
- The dollar index rose and touched 102.53, its highest level since 10 April 2025. [ 1 , 2 ]
- Concerns over France's public finances and a selloff in French government bonds were behind the currency move. [ 1 , 2 ]
Still unclear
- The size and level of the dollar index move. The documents disagree: one reports a 0.39 percent rise to 102.33, the other a 0.26 percent rise to 102.16.
- Whether the situation amounts to a eurozone sovereign debt crisis. One document frames it as fears of a potential crisis rather than a confirmed one, and no document reports an official declaration.
- The euro's closing level for the session and the scale of Banque de France's budget deficit expectations. The business outlet's article text is truncated before the deficit figure is given, and the two documents give different intraday levels.