The euro hit a 17-month low against the US dollar on Thursday, October 1. Investors sold European assets amid French debt fears, higher oil prices and rising inflation. Reuters reported that French bond yields rose to another 14-year high, and even benchmark German debt came under pressure.

Key Numbers

  • EUR/USD: fell as low as roughly $1.1243 on Thursday. By Friday it was near $1.1237, its weakest since May 2025. FXStreet noted a brief dip below $1.1220.
  • Dollar index: about 101.93 on Friday, up around 1% on the week and heading for a third straight weekly gain.
  • Quarterly trend: the dollar posted its sixth straight quarterly gain against a basket of currencies, its longest streak since 2022.
  • Sterling: down about 0.5% at $1.32 on Thursday after a 2.1% drop in September.
  • Yen: the dollar traded near 158 yen.

Why the Euro Is Under Pressure

French fiscal worries: France's shaky finances have driven French yields sharply higher. FXStreet said the 10-year OAT-Bund spread widened by as much as 40 basis points in a little over three weeks.

Oil and inflation: Brent crude is back above $100 a barrel. Traders are watching stalled US-Iran talks to end the seven-month Middle East war. A jump in euro zone inflation underlined the threat that costly energy poses to growth.

Global bond selloff: US and European government yields hit fresh highs. An analyst quoted by Reuters said French and Italian bonds are lagging Treasuries and Bunds as money moves into the most liquid, defensive markets.

What About US Inflation?

US inflation actually came in softer than expected for August, with July revised down, which lowered bets on a Federal Reserve rate hike this month. The dollar's gains therefore reflect safe-haven demand, higher yields and oil-driven inflation fears more than a hot US inflation print.

What to Watch Next

  • US payrolls: the September jobs report was forecast to show around 90,000 jobs added, with unemployment at 4.1%.
  • ECB: Christine Lagarde has called for a "measured" approach to policy.
  • French bond spreads: further widening could keep pressure on the euro.