The euro remained close to a 17-month low against the U.S. dollar on Tuesday, as investors grew increasingly concerned about France’s high debt, widening borrowing costs and political uncertainty across the eurozone. The currency traded around $1.1220 in early Asian trading, after reaching its weakest level since May 2025 in the previous session. Reuters
France has emerged as the main focus of investor anxiety. The government is attempting to push through a controversial 2027 budget designed to reduce its deficit and contain a record-high debt burden. But a deeply divided parliament and political positioning ahead of the 2027 presidential election have raised doubts over whether meaningful fiscal reforms can be delivered. Reuters
Investors have consequently been selling French government bonds and moving toward safer German debt. The premium demanded to hold French rather than German government bonds recently surged to levels not seen since the eurozone sovereign-debt crisis, raising fears that financial stress could spread to other European economies. Reuters
France’s public debt has reached roughly 119% of GDP, and projections indicate it could approach 122% in 2027. Meanwhile, rising interest costs are making the government’s efforts to repair its finances increasingly difficult. AP News
The euro is also facing pressure from a strengthening U.S. dollar and high U.S. Treasury yields. Analysts warn that if Europe’s fiscal and political uncertainty persists, the euro could potentially fall below $1.10 against the dollar.
News as Reported.
