Euro Plunges as France Fiscal Worries Combine with Fed Rate Hikes

The euro has been on a downward trend for four weeks in a row, its worst streak in about four months. The currency's decline is largely attributed to concerns over France's fiscal trajectory and the Federal Reserve's decision to raise interest rates in mid-September.

According to Jane Foley, senior forex strategist at Rabobank, 'the outlook for the euro is clearly on a weakened footing relative to last year.' This sentiment is fueled by worries about low European gas storage, high energy prices, and the risk of hybrid attacks from Russia.

The yield gap between French bonds and safe-haven Bunds has widened to around 150 basis points, its highest level since the euro area's sovereign debt crisis in 2011. This sell-off has shown signs of spreading to other debt-laden countries like Italy and Greece.