Euro falls to 17-month low amid eurozone debt fears

The euro hit a 17-month low against the US dollar in early trading on Monday, falling to $1.12. This decline has been driven by growing concerns over eurozone debt, particularly in France, compounded by rising global bond yields and higher oil prices. The euro has lost around 5% of its value since the start of 2026, marking its lowest level since early 2025.

Ricardo Amaro, lead eurozone economist at Oxford Economics, attributed the slide to a shift in investor expectations regarding US Federal Reserve policy, particularly higher interest rates. The euro's weakness has been exacerbated by a sharp sell-off in French government bonds, raising fears of a return to sovereign debt crisis dynamics in the eurozone.

The US dollar remained relatively stable, while the euro dropped to nearly $1.1160, its lowest point in 17 months. Investors are particularly worried about France's budget deficit and the political landscape ahead of next year’s presidential election. The far-right party's policies have added to market uncertainty.

The euro has experienced significant volatility, with ongoing questions about interest rates and French debt markets. Analysts suggest the currency will continue to face challenges as these issues unfold.