The euro weakened on Friday, heading for a weekly loss against both the US dollar and the Japanese yen. The decline was driven by a selloff in French government bonds, which pushed France's debt risk premium to its highest level since the 2011 euro zone sovereign debt crisis. Concerns about growing unrest in France further pressured the single currency.
The yen, meanwhile, strengthened against the dollar, benefiting from safe-haven flows following a selloff in artificial intelligence stocks on Thursday. The dollar index edged lower on the week, though by less than the euro. France plans to deploy 70,000 police to manage protests on Saturday, and the country faces a potential rating downgrade by Moody’s later in the day.
Marc Chandler, chief market strategist at Bannockburn Global Forex, noted that while pressure in the European bond market has eased, Moody’s review of France’s debt rating poses a challenge. The euro was last down 0.12 percent at $1.12, set to end the week 0.35 percent lower. It fell more sharply against the yen, touching its lowest level since October 2025 at 175.08 yen on Friday.
The dollar index rose 0.13 percent to 101.70 and was headed for a weekly loss of 0.10 percent. The yen strengthened 0.18 percent to 156.45 per dollar and was on track for a weekly gain of around 0.9 percent. Lee Hardman, senior currency analyst at MUFG, noted that the yen has continued to trade at stronger levels due to risk-off trading conditions.
Traders are now focusing on next week's policy meetings at the Federal Reserve, the European Central Bank, and the Bank of Japan. All three are expected to leave rates unchanged, but investors will look for clues on the future path of policy. PMI data showed private-sector growth in the euro zone slowed in October to its weakest pace in four months, hurt by a renewed contraction in France.
In Japan, data showed annual core consumer inflation exceeded the central bank's 2 percent target in September for the first time in nine months. Traders are pricing in a 59 percent chance of a Bank of Japan rate hike in December.