Euro Nears 17-Month Low as French Debt Concerns Weigh

what happened

Trading Economics reports that the euro started the week below $1.12, close to its weakest level in 17 months. Investors are assessing France’s record-high debt and political obstacles to carrying out budget reductions, while the resilience of the US economy and the dollar’s strength continue to weigh on the currency.

France’s 2027 budget plans target a reduction in the fiscal deficit to 5% of GDP. However, doubts are growing over whether the government can win parliamentary approval for significant spending cuts, given the deep divisions in parliament and next year’s presidential election.

Brent crude prices edged down as fading supply-risk concerns led traders to reduce expectations for additional central-bank rate hikes. Markets are now awaiting Wednesday’s US CPI report for signals on the Federal Reserve’s interest-rate path. Eurozone central bankers are also due to speak this week at the IMF-World Bank annual meetings in Bangkok.

why it matters

The euro is being pressured by concerns about French public finances as well as the dollar’s support from the resilient US economy. US inflation data and remarks from eurozone policymakers may shape expectations for the next steps in interest rates.

instruments