Euro hits 17-month low against dollar amid French fiscal crisis

The euro has fallen to a 17-month low, reaching 1.1161 against the US dollar. This decline marks the currency's lowest level since May 2025, dropping below the 1.12 threshold for the first time in over a year.

A primary driver of the depreciation is the fiscal crisis in France. French financing costs have reached their highest levels since 2002, sparking market fears of systemic risk and contagion within the eurozone. This has prompted institutional investors to reduce exposure to the euro in favor of the US dollar.

Other contributing factors include a resilient US economy, higher interest rate differentials favoring the United States, and European exposure to rising energy costs and industrial weakness. While the dollar's strength is a factor, analysts note that the euro has been among the worst-performing G-10 currencies recently. For investors, particularly in Spain, the weak euro creates a dual impact: it lowers costs for exporters earning in dollars but increases the price of imported components.