1.1265: Euro hits yearly lows amid high Oil prices, rising US yields and debt woes

The Euro (EUR) has reached annual lows of 1.1265 against the US Dollar (USD) due to rising oil prices, increasing US Treasury yields, and concerns over France’s government debt. This marks the lowest point for the Euro since May 2025 and indicates a 2.8% decline over the past four weeks. Despite the Euro Area’s manufacturing PMI showing improvement, the Euro has failed to gain traction.

Eurozone HCOB Manufacturing PMI is now at 52.9, surpassing expectations, but investors remain cautious due to high oil prices and geopolitical tensions. In France, government debt has hit its highest level since 1946, exacerbating fears of a debt crisis. Meanwhile, the US Dollar remains strong thanks to rising Treasury yields, surpassing 24-year highs, and uncertainty surrounding the Middle East conflict.

The US PCE Price Index, released earlier, showed less inflation than expected, further strengthening the US Dollar. Analysts caution that without a breakthrough in US-Iran negotiations, the Dollar is likely to remain favored in October, potentially benefiting European government debt sell-offs.