EUR/USD Plunges to 15-Month Low Amid France Fiscal Concerns
The EUR/USD pair has fallen to a 15-month low due to rising Treasury yields and concerns over France's fiscal situation. The French government is set to unveil a €54 billion fiscal consolidation plan, but market participants are skeptical about its effectiveness in reducing the budget deficit to 5% of GDP by 2027.
The spread between French and German bonds has widened to 127 basis points, its highest level since the euro-area debt crisis. France's debt burden is expected to exceed 120% of GDP next year, adding to market uncertainty.
In contrast, stronger-than-expected eurozone manufacturing PMI data has been overshadowed by these concerns. The manufacturing PMI rose for a third consecutive month to 52.9 in September, but the impact on the EUR/USD pair remains limited due to the overall bearish sentiment.
The US dollar is rising on safe-haven flows amid risk-off trade in Europe and as US Treasury yields remain elevated. The 10-year Treasury yield reached its highest level since 2002, partly driven by an upward revision to US GDP growth.