Dollar Poised for Largest Monthly Rise Against Euro in 14 Months
The US dollar is poised for its largest monthly rise against the euro in 14 months, driven by strong US growth and rising interest rates. The euro has dipped to a low of $1.1312 since May 2025, with overnight trading at around $1.1339. Brent Donnelly, president of foreign exchange trading at Spectra Markets, attributed this decline to the 'US economy running hot' and Europe's struggles with AI, energy supplies, and French politics.
France is grappling with debt and gridlock ahead of next year's presidential election, while benchmark European gas prices have spiked to their highest since 2022. The spread between German yields has widened beyond 115 basis points, a level not seen since 2012. Options prices have tipped in favor of buying protection against further euro falls.
The dollar has also made a 16-1/2-month top on the Swiss franc at 0.8358 francs, with investors seeking low-yielding alternatives to the yen. The yen has fallen out of favor as a short against the dollar following US-Japan buying in July and August.