The euro has plunged to its lowest level against the US dollar in 17 months, driven by mounting concerns over France’s escalating debt levels and broader political instability across the eurozone. On Monday, the euro fell approximately 0.8% to below $1.12, marking its weakest point since May 2025.
France’s economic outlook has become a focal point for investors, as the nation grapples with rising borrowing costs. The yield on French 10-year government bonds has surged to its highest since 2002, and the spread between French and German bonds has widened to levels not seen since 2012. In response, the French government has outlined a €54 billion savings plan aimed at reducing the budget deficit from 5.5% of GDP this year to 5% in the next. However, the implementation of these spending cuts faces significant hurdles due to political opposition.
The situation in France is further complicated by political uncertainty following Spain’s decision to hold an early general election. Analysts warn that the combined effects of potential political instability in both countries and sovereign debt concerns could exert additional downward pressure on the euro, posing risks to the broader currency bloc.
This month alone, the euro’s value has decreased by about 1.2%, continuing its downward trajectory from a January peak of $1.20. The currency’s decline highlights the economic challenges and political tensions that are currently influencing the eurozone’s financial stability.
