Euro falls, set for fifth straight weekly drop as oil prices rise

The euro has been on a downward trend for the fifth week in a row, according to recent market activity. On Monday, the European currency hit a 17-month low of $1.1161, as investors grew concerned about France's alarming public debt levels and the challenging political landscape surrounding budget cuts. This situation contrasts sharply with the robust performance of the US economy and its currency.

The dollar index, which gauges the value of the US dollar against a basket of currencies, rose 0.13%, reaching 102.25. Over the past week, the index has climbed 0.3% and is on track for its fourth consecutive weekly gain since May 2025. The euro, meanwhile, slipped by 0.1% to $1.1198, marking a 0.5% decline over the past week and potentially entering its longest streak of weekly declines against the dollar since the beginning of 2025.

Concern over French and Italian government bonds led to a weekly decrease in risk premiums after a dip in late September. Investors are eagerly awaiting fresh developments before demanding higher compensation for fiscal and political risks. Trump's assurance that the US would not attack Iran before the midterm elections, as well as productive talks with Tehran, has helped ease global bond markets.

However, oil prices have risen, partly offsetting the euro's decline. After briefly falling to $90.01, US crude rebounded to $92.04 per barrel, while Brent crude climbed to $104.88 per barrel. Meanwhile, bond yields worldwide have increased due to expectations of central bank rate hikes and mounting concerns over government finances.

Despite a 19.4% probability of a rate increase of at least 25 basis points at the Federal Reserve's upcoming meeting, investors are more optimistic about a hike at the December meeting, with an 85.8% chance.