Euro Dips to 17-Month Low on France Financial Fears

The euro hit a 17-month low against the US dollar on Monday, dropping to around $1.11. This decline came as investors grew increasingly worried about France’s public finances and political instability in Europe. The sell-off in French government bonds and rising borrowing costs have made the euro a less attractive asset, while the US dollar gained strength.

France’s draft 2027 budget aims to cut the public deficit from 5.4% of GDP this year to 5% next year. However, economists are skeptical about whether the government can meet this target. Political uncertainty in Spain, where a snap election may be needed due to housing crisis protests, is also contributing to investor caution.

The eurozone is facing challenges such as higher inflation, interest rates, and weak economic growth. A global bond sell-off last week pushed borrowing costs to multi-decade highs, with French government debt being particularly affected. Despite weaker-than-expected US jobs data, the US dollar strengthened due to higher Treasury yields and demand for safer assets.