Euro Hits 17-Month Low Amid Rising European Debt

The euro dropped to a 17-month low on Monday, reaching its weakest point since May 2025. By mid-afternoon, one euro was valued at approximately $1.12, after briefly falling below that level earlier in the day. The decline comes amid rising government debt across Europe and economic challenges exacerbated by conflicts in Iran and Ukraine.

A weaker euro strengthens the U.S. dollar, making European exports cheaper while potentially increasing the cost of American goods overseas. The U.S. reported a $220.3 billion trade deficit with the European Union last year, importing $632.9 billion worth of goods from EU countries.

Richard Stevens, executive director of research and product development at CME Group, noted that the U.S. dollar has remained relatively stable this year, despite persistent inflation prompting the Federal Reserve to raise interest rates last month. Stevens also observed that expectations of future rate hikes and higher borrowing costs are balancing the dollar's impact.

The global bond market sell-off has hit European nations hard, with rising public debt and elevated energy costs driving investors away. France's and Germany’s 10-year bond yields closed at roughly $4.86 and $3.50 on Monday, significantly higher than before the U.S. and Israel’s conflict with Iran began in late February.

The euro’s decline was further fueled by Spanish Prime Minister Pedro Sánchez’s announcement of a snap election for November 29, following widespread protests over a housing crisis in Spain.