Euro Hits 19-Month Low Amid European Fiscal and Political Risks

The euro dropped to a 19-month low against the US dollar on Monday, marking its weakest point since March 2025. The decline came as investors reacted to rising fiscal and political risks in Europe, particularly in France.

By 0700GMT, the euro was trading 0.6% lower at $1.1164. The pressure on the single currency followed significant volatility in French government bonds on Friday, with the spread between French and German 10-year borrowing costs widening to 159 basis points before narrowing to 141 basis points by the end of the day. France’s 10-year bond yield briefly neared 5%, signaling heightened investor concerns over holding French debt.

Fears about France’s fiscal outlook and political instability ahead of the 2027 presidential election have sparked worries that economic strains could extend to other indebted eurozone nations. Meanwhile, the US dollar gained strength despite softer-than-expected US employment data and diminished expectations of a Federal Reserve interest rate hike this month.