The euro fell to its weakest level in 17 months against the U.S. dollar on Monday, pressured by fiscal concerns in France and renewed political uncertainty in Spain.
The single currency traded around $1.12, reaching its lowest level since May 2025.
France’s Fiscal Outlook Pressures the Euro
France has become a focus for currency and bond markets as investors assess the country’s fiscal outlook and political uncertainty.
Concerns over government finances have increased attention on French sovereign debt, adding another source of pressure for European financial markets.
Spain Calls Snap Election
Political developments in Spain added to the regional backdrop after Prime Minister Pedro Sánchez called a snap election following the rejection of housing measures in Congress.
The development introduced another element of political uncertainty for investors assessing the outlook for major euro-area economies.
Inflation Remains Above ECB Target
The currency move also comes as the European Central Bank faces inflation that remains above its target.
Eurozone annual inflation accelerated to 3.8% in September from 3.2% in August, reaching its highest level since September 2023. Energy prices were a major contributor to the increase.
Core inflation, which excludes energy and food, also edged higher to 2.5% from 2.4%.
The euro’s decline comes as currency markets assess fiscal conditions in France, political developments in Spain and the outlook for monetary policy across the euro area.
Source: Trading Economics
