Asian currencies weaker as dollar surges, euro hits 17-month low

Asian currencies faced pressure on Monday as the U.S. dollar strengthened, while the euro hit a 17-month low due to mounting fiscal concerns in France and a sell-off in European bonds. Trading in Asia was holiday-thin, with China and South Korea observing market holidays. The U.S. dollar index reached around 102.48, up 0.5%, with the USD/JPY pair increasing 0.2% to 158.10.

The EUR/USD pair dropped 0.7% to 1.117, its lowest since May 2025. The GBP/USD pair fell 0.3% to 1.320, while the AUD/USD pair declined 0.3% to $0.694 and the NZD/USD pair slipped 0.4% to $0.559. Despite weaker-than-expected U.S. jobs data, the dollar's strength persisted, with a 78% probability now seen for a Fed rate hike in October, up from 36% a week prior.

The euro's decline has been a key factor in the dollar's rise, as France's debt burden and political uncertainty ahead of next year's election have fueled concerns about European market contagion. The euro's slide has persisted for four consecutive weeks, driven by fiscal concerns in France and broader bond market volatility.