Euro falls to 17-month low against dollar amid French debt fears

AI desk brief

The euro slid to a 17-month low below $1.12 as French fiscal worries and wider eurozone political uncertainty pushed French 10-year yields to their highest since 2002 and widened the France-Germany spread to its widest since 2012. The move has lifted the dollar and tightened financial conditions in Europe, a macro setup that is typically mixed for USD-priced precious metals: supportive for safe-haven demand, but a firmer greenback can cap upside.

Markets are also watching the ECB’s inflation challenge, with Middle East war risks adding to price pressures and increasing the chance of policy tension across the bloc. UniCredit’s Roberto Mialich said euro weakness could extend toward $1.10 near term as political tensions in France and Spain keep contagion fears alive.