Euro Hits 17-Month Low as French Debt Fears Lift Dollar
The euro dropped to a 17-month low on October 5, 2026, as concerns over French debt and a global bond selloff drove investors toward the US dollar. The euro fell to $1.1161 in Asian trading, its weakest level since May 2025, before slightly recovering to $1.1178. The dollar index, which tracks the US currency against six major peers, rose 0.47 percent to 102.37, marking its highest level since April 2025.
French fiscal worries intensified as bond-market turmoil pushed borrowing costs to multi-decade highs. The premium of French 10-year government bond yields over German ones surged above 150 basis points, the highest since late 2011. French yields also hit their highest level since 2002, reflecting worries about inflation risks from elevated oil prices and political gridlock. The dollar benefited from higher US Treasury yields and safe-haven flows linked to the global debt selloff.
Despite weak US jobs data, which reduced expectations of an immediate Federal Reserve rate hike, the dollar maintained its strength. The US economy added only 29,000 jobs in September, far below the expected 90,000, causing markets to price in an 80 percent chance of the Fed keeping policy unchanged in October. Analysts remain divided on the Fed's future moves, with some considering the expected path of rate hikes aggressive.
The weaker euro could help European exporters but raises import costs for energy and other dollar-priced commodities. For France, the market pressure increases the stakes of budget negotiations, as higher borrowing costs could constrain fiscal choices before elections. The next key signals will come from French bond auctions, euro-area inflation data, and central-bank guidance.