Euro Hits 17-Month Low Amid Rising Political and Fiscal Risks

The euro dropped to its lowest level in 17 months amid rising political and fiscal risks in Europe. The shared currency fell by as much as 0.8% in Asian trade on Monday, reaching 1.1161 per dollar. Fast-money funds in Asia reportedly sold the euro for dollars in spot trading, pushing prices past key levels and triggering options-related selling.

Brent Donnelly, president of foreign exchange trading at Spectra Markets, noted that political uncertainty in France has arrived earlier than expected. 'The French politics trade that many expected would escalate this winter as April 2027 elections neared … is here now,' he said. Donnelly also expressed skepticism about the credibility of any budget promises made by the French government at this juncture.

French bond futures dipped 0.13%, nearing record lows seen in recent weeks. Meanwhile, the yield on US 10-year Treasury notes settled at 5.262%, after a recent spike to a 24-year high. The British pound also slipped 0.24% to $1.32064, while the Japanese yen traded at 157.92 per dollar. These movements contributed to a 0.47% rise in the dollar index, which measures the US currency against six major units.