Euro Drops to 17-Month Low on French Debt Worries and US Inflation

The euro slumped to its lowest level in 17 months against the dollar on Monday, driven by twin pressures from European debt concerns and US inflation.

France’s rising budget deficit and political uncertainty ahead of its 2027 election have raised fears about the country’s ability to stabilize its public finances. This has put pressure on French government bonds, with investors demanding higher interest rates to offset the risk.

The dollar gained further support as persistent inflation pressures in the United States kept the Federal Reserve on track for higher interest rates. The combination of weaker European prospects and stronger US economic conditions strengthened the greenback.

Analysts warn that if France’s fiscal challenges worsen, it could reignite fears of a broader euro-zone debt crisis, adding to the euro’s woes.