Euro Hits 17-Month Low Amid Political Uncertainty in Spain and France
The euro reached its lowest level against the U.S. dollar since May 2025, driven by political uncertainty in Spain and France. Both countries are facing high inflation, rising interest rates, and increased borrowing costs, but Europe's weak growth and fragmented bond market have exacerbated concerns among investors. In Spain, Prime Minister Pedro Sánchez is expected to call a snap election amid growing public protests over housing issues. France remains a focal point for European fiscal worries as its government struggles with high debt levels that are becoming increasingly expensive to service. Despite efforts by the French administration to reduce the deficit from 5.4% of GDP in 2026 to 5%, analysts doubt it will meet these targets before next year's presidential election. Experts at Barclays and ING have highlighted structural fiscal challenges, noting that even if current plans are adopted, France’s debt ratio is unlikely to stabilize without further difficult policy choices from the next government.
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Topics: Euro Fiscal Policy Inflation Interest Rates Political Uncertainty U.S. Dollar