Forex
EUR/USD Plummets as Yield Spread Widen
The EUR/USD pair is trading at 1.1316 in the European afternoon, down 0.12% on the day and four pips above Tuesday's intraday low of 1.1312.
September was a tough month for the euro, with the pair declining by 2.3%, making it the worst month since July 2025.
The decline came despite higher-than-expected inflation rates in Germany, Spain, France, and Italy, which should have supported the currency.
Instead, the euro is being driven down by the US bond market, specifically the yield spread between U.S. and German government bonds.
The 10-year Treasury yield closed at 5.289% on Wednesday, while Germany's 10-year Bund trades at 3.56%, resulting in a 173-basis-point gap in favor of the dollar.