Euro skids toward fifth weekly fall but selling pressure slows

The euro faces a potential fifth weekly decline, as market concerns over France's record-high debt persist. On Monday, the currency hit a 17-month low of US$1.1161 against the US dollar due to worries about France's fiscal situation and the difficult budget-cutting process. However, the downward trend appears to be losing momentum, with signs that the selling pressure is weakening.

France's tumbling debt market has stabilized, and a decline in US yields has tempered the dollar's rally. The euro has since bounced back, trading at US$1.1211, marking a 0.3% decline this week and a more than 3% drop over the past five weeks. The euro against the British pound has also dropped to a 16-month low of 84.74 pence. Analyst Matt Simpson suggests that the market moves are stretched and advises caution near these lows.

In France, protests against education conditions and economic concerns have emerged, complicating the delicate balance between social spending demands and market skepticism. French bond sales and student demonstrations have created a feedback loop, potentially leading to higher bond yield spreads if unrest escalates. Meanwhile, the US dollar's gains slowed as US yields approached their biggest weekly drop in about three months.

The yen experienced a fourth consecutive weekly decline, but recent movements have been relatively minor as it steadied around 158 yen to the dollar. The Australian and New Zealand dollars also faced declines, with the kiwi nearing its lowest point in 2025.