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Euro Falls to 17-Month Low as France and Spain Unsettle European Markets

The euro touched $1.1161 on Monday, its weakest since May 2025, as French debt worries and Spain's snap election pushed the dollar index to 102.17.

By Global Terminal Staff · · 3 min read

A scattered pile of euro banknotes in 20, 100 and 200 denominations
Photo: Ibrahim Boran / Unsplash

Why it matters

  • The euro fell as low as $1.1161 on Monday, its weakest level since May 2025, and ended the day down 0.33% at $1.1217.
  • French and Spanish borrowing costs rose while investors bought German debt, a sign of renewed worry about public finances in the euro area.
  • The euro slid even though weak U.S. jobs data cut bets on another Fed hike, which shows how much of the move is about Europe.

Analysis: this piece includes our interpretation of the facts reported.

The euro fell to $1.1161 on Monday, Oct. 5, its weakest level since May 2025, as worries about France's public finances and a snap election in Spain hit European assets. The single currency ended the day at $1.1217, down 0.33%, according to Investing.com data, while the U.S. dollar index rose 0.25% to 102.17.

Why is the euro falling?

The short answer is politics and debt in two of the euro area's four largest economies.

In Spain, Prime Minister Pedro Sánchez called a general election for Nov. 29 after Congress rejected two of his government's housing decrees on Friday, Euronews reported. His minority government had been negotiating much of its agenda vote by vote.

In France, investors are worried about a public debt that Euronews put at close to 120% of gross domestic product, and about the 2027 presidential election. The French 10-year yield was 4.917% in early Monday trading, up from about 4.856% at Friday's close, Euronews said. It put the gap over German Bunds at 146 basis points. Trading Economics put the spread at 152 basis points, the widest since 2011.

Spain's 10-year yield was 4.07% to 4.09% on Monday morning, about 65 basis points above German debt, according to Euronews. German 10-year yields fell for a fifth straight day to their lowest since Sept. 8 as investors sought safety, Trading Economics said.

The euro's slide also marks a fourth straight weekly loss, Euronews noted.

Monday's moves in numbers

MarketMonday closeChange on day
EUR/USD1.1217-0.33%
U.S. dollar index (DXY)102.17+0.25%
GBP/USD1.3218-0.19%
USD/JPY157.96+0.06%
STOXX Europe 600633.62+0.36%
CAC 40 (Paris)7,834-0.80%

Sources: Investing.com historical data; CAC 40 from Trading Economics. The dollar index touched 102.54 during the day, its highest since April 2025, according to Trading Economics.

Stocks split along national lines

European shares as a whole held up. The STOXX 600 rose 0.36%, but France's CAC 40 fell 0.80%, and French stocks slid to a six-month low, Reuters reported. Schneider Electric dropped more than 9% after announcing a $22.6 billion deal to buy U.S. software company PTC, according to Trading Economics. Spain's IBEX 35 rose more than 1% despite the election call, led by banks such as Banco Santander.

Why didn't weak U.S. jobs data help the euro?

Because the pressure is coming from Europe. Friday's report showed U.S. employers added just 29,000 jobs in September, which normally weighs on the dollar by lowering the odds of another Federal Reserve hike. Our analysis of the jobs report covers that reaction. On Monday, the dollar rose anyway.

Inflation is not the euro's problem either. Euro area prices rose 3.8% in the year to September, up from 3.2% in August, according to Eurostat's flash estimate, driven by an 18.8% jump in energy prices. Markets are pricing one more quarter-point European Central Bank hike by December, Trading Economics said. The ECB's next policy meeting is Oct. 28–29, according to its calendar. Our guide to September's central bank decisions explains how the ECB got here.

Higher rates usually support a currency. This time, rising French and Spanish yields reflect risk, not reward, and that is weighing on the euro.

Track the euro, the dollar and other major pairs on our world markets page and in currency news. Upcoming decisions are on the economic calendar.

Sources