Euro faces political, fiscal reckoning as it hovers near 17-month low

Business Recorder reported that the euro traded close to a 17-month low on Tuesday, pressured by political uncertainty and fiscal worries across the euro zone. The single currency eased to $1.1220 in early Asian trading, after hitting its weakest level since May 2025 in the prior session. It has shed 1.2% over the past week and also fell more than 1% against sterling, quoted at 84.83 pence.

Political gridlock in France and high debt levels are weighing on the currency, according to the report, while a forthcoming early election in Spain adds to the pressure. Rising French borrowing costs have also started to spill into the wider euro area, which is worrying policymakers. A strategist at Commonwealth Bank of Australia took a pessimistic view of the euro's near-term direction.

The dollar pushed higher and extended its strong run, supported by US Treasury yields that reached multi-decade highs overnight. The dollar index stood at 102.16, after reaching an 18-month peak in the previous session, while the dollar bought 157.92 yen. Sterling slipped 0.02% to $1.3222, even though markets now expect a smaller chance of a Federal Reserve rate hike this month after softer US jobs figures.