Dollar Soars to 17-Month High as Eurozone Faces Economic and Political Pressures

The US dollar has reached a 17-month high against major currencies, including the euro, due to various economic and political factors. The euro fell below $1.13 against the dollar for the first time since May 2025, with its September loss reaching around 2.5%, its biggest monthly decline since July 2025.

The dollar's strength is partly attributed to the largest quarterly increase in US Treasury yields since 1994 and a range of political risks facing Europe, including the highly contested French election next year and pressure on German Chancellor following regional elections.

US inflation rose less than expected in August, but rising inflation in the eurozone highlights the threat posed by elevated energy prices. Analysts say the inflation data had limited impact on expectations for further Federal Reserve monetary tightening.