Euro Slides to $1.12 17-Month Low as French Fiscal Fears Rattle Markets

3 articles · Updated · DW (English) · Oct 5

$1.12 marked the euro’s weakest level since early 2025 on Monday, extending a roughly 5% drop against the dollar this year.
French fiscal worries drove the latest sell-off, with investors demanding nearly 5% on 10-year French bonds and pushing the France-Germany yield gap to its widest since the eurozone debt crisis.
Higher global bond yields, rising oil prices and expectations of higher US Federal Reserve rates added pressure, while investors shifted toward perceived safer German debt.
The ECB now faces calls to contain spillover into other bond markets, including Italy’s, but economists say any hawkish signal could further lift French yields and deepen euro weakness.
A weaker euro risks worsening inflation into 2027 by raising the cost of dollar-priced imports such as oil and gas, reviving debate over whether France could become a broader eurozone stress point.