Euro steadies after 17-month low amid French debt fears
The euro steadied just above a 17-month low on Tuesday, October 6, 2026, as eurozone bond markets showed signs of stabilization. The currency had fallen sharply the day before due to concerns over rising French debt levels and potential spillover effects across the region.
The greenback remained strong, trading near its highest level since April 2025, supported by rising US Treasury yields. The euro dipped less than 0.1% to US$1.12, after hitting a 17-month low of US$1.116 in the previous session, extending a more than 1% decline from the prior week.
Joseph Capurso, a strategist at the Commonwealth Bank of Australia, expressed pessimism about the euro's outlook, predicting it could drop below US$1.10. He suggested that significant decreases in oil prices or effective measures by France to reduce its budget deficit could help the euro recover, though he deemed the latter unlikely in the near term.
Despite the euro's struggles, the US dollar maintained its strength, supported by elevated Treasury yields, which reached multi-decade highs on Monday. The dollar index remained near 102.16, after hitting an 18-month high of 102.53 in the previous session. The greenback's resilience persisted even as expectations for a Federal Reserve rate hike in October diminished, with the chance of a hike now at 22%, rising to 85% for December.
In other currency movements, the dollar rose 0.2% against the yen to 158.21, while sterling held steady at US$1.323. The Australian dollar slipped 0.1% to US$0.696. The Bank of Japan may signal in October that underlying inflation has hit its 2% target, suggesting potential interest rate hikes in the coming months.