Euro falls to $1.11 amid France’s debt risks — Anadolu Agency

The euro fell to $1.11, its lowest level since May 2025. Since the beginning of 2026, the common currency of eurozone countries has lost about 5% of its value. As Anadolu Agency reports, financial and political uncertainty in the eurozone, particularly the situation in France and early elections in Spain, increased pressure on the euro.

French finances put pressure on the currency

Developments in France, the eurozone’s second-largest economy, became a key factor in the euro’s weakening. The yield on 10-year French bonds approached 5% and reached its highest level since 2002 amid geopolitical risks and a global bond sell-off.

According to France’s National Institute of Statistics and Economic Studies, INSEE, the country’s state budget deficit rose to 5.8% of GDP, exceeding the EU-set threshold of 3%. France’s nominal public debt reached €3.6 trillion, or 119% of GDP, also above the Maastricht criterion of 60% of GDP. The gap between France’s and Germany’s borrowing costs became the widest since the 2012 debt crisis.

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Constraints for the ECB

The agency also names the political crisis and street protests in France, Italy’s debt vulnerability, and early elections scheduled by Spanish Prime Minister Pedro Sanchez for November as additional factors of instability. At the same time, the crisis in the Middle East is increasing energy costs and intensifying fluctuations in the global bond market.

Under such conditions, global capital is moving into the US dollar as a safe-haven asset. Analysts believe that the fragmented structure of the eurozone’s national financial markets makes the region more vulnerable to such shocks despite its common currency.

Financial and political risks are narrowing the European Central Bank’s monetary policy options. Expectations of three rate hikes next year have shifted to two increases of 25 basis points each. Chris Turner, head of global markets research at ING, predicts that the euro-dollar exchange rate may remain within the 1.10–1.15 range over the next two quarters due to the US Federal Reserve’s hawkish stance and rising bond yields.