The euro remained near a 17-month low on Tuesday, weighed down by political uncertainty and concerns over public finances in the eurozone, while the dollar continued to strengthen, supported by higher U.S. Treasury yields.
The euro edged down to $1.1220 in Asian trading after hitting its lowest level since May 2025 in the previous session. It has fallen 1.2% over the past week.
The euro also slipped to 84.83 pence after declining by more than 1% last week.
The European currency has come under pressure amid concerns over debt and political deadlock in France, as well as the prospect of early elections in Spain.
The euro’s decline comes as eurozone countries face a sharp rise in French borrowing costs, raising concerns that financial pressures could spread to other European debt markets.
Joseph Capurso of Commonwealth Bank of Australia said his outlook for the euro was “very bearish,” predicting that it could fall below $1.10. However, he said such a decline would require a significant drop in oil prices, a further increase in expectations for tighter European monetary policy, and serious deficit reduction—factors that do not appear likely in the near term.
The dollar rose broadly, supported by U.S. Treasury yields that have reached elevated levels compared with those seen over recent decades.
The dollar climbed to 157.92 yen, while the British pound fell 0.02% to $1.3222. The dollar index was steady at 102.16 after reaching an 18-month high in the previous session.
The dollar’s strength came despite declining expectations of a Federal Reserve interest-rate hike this month following weaker-than-expected jobs data. Investors nevertheless believe the central bank may still need to maintain a tighter monetary policy stance.
Barclays said adjustments to inflation expectations and economic data had reduced the urgency for further monetary tightening. However, rising input costs continued to raise questions about the central bank’s ability to keep inflation at its 2% target.
The Australian dollar fell 0.07% to $0.6967, while the New Zealand dollar declined by the same percentage to $0.5596.
Source: Reuters
