
Over the past 17 months, the euro has fallen sharply against the US dollar, raising fears that this could worsen inflation in the EU, at a time when investors are already extremely concerned about political uncertainty and high debt levels in France.
The common currency hit a 17-month low against the dollar on Monday amid fears of rising government bond interest rates and rising oil prices.
The euro has lost ground against the greenback for most of this year. On Monday, it fell to $1.12, its lowest level since early 2025.
Ricardo Amaro, chief eurozone economist at Oxford Economics, says the overall decline is related to changing investor expectations for the policy of the US Federal Reserve (Fed), which is facing pressure for higher interest rates amid rising global bond yields.
However, according to him, the recent massive euro sell-off has been driven particularly by concerns about France, where "investors are preparing for higher fiscal risk."
The sale of French bonds accelerated last week as doubts about the long-term sustainability of the country's public finances grow.
The yield on French 10-year bonds, which reflects the country's borrowing costs, rose to 5% before easing slightly. France has long had structural financial problems.
Since President Emmanuel Macron took office in May 2017, public spending has increased, while he has implemented significant tax cuts.
As a result, the national debt has increased by over 1 trillion euros, and the debt-to-GDP ratio in France is now almost 118%.