{
  "id": 12188481,
  "title": "Euro plummets against US dollar: has the next financial crisis begun?",
  "url": "https://urgent.news/2026/10/05/euro-plummets-against-us-dollar-has-the-next-financial-crisis-begun-12188481",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-10-05T14:28:00.000Z",
  "source": {
    "name": "DW News",
    "slug": "dw-news",
    "url": "https://www.dw.com/en/euro-plummets-against-us-dollar-has-the-next-financial-crisis-begun/a-79549031?maca=en-rss-en-all-1573-rdf"
  },
  "original_language": "en",
  "account": "The euro experienced its weakest point in 17 months against the US dollar on Monday, as worries about debt in France added to broader concerns about government bond yields and soaring oil prices, the report says. The euro has been on a decline against the dollar all of 2026, dropping around 5% since the beginning of the year, with the exchange rate hitting $1.12 on Monday, the lowest level since early 2025, reports say. Ricardo Amaro, a leading eurozone economist at Oxford Economics, told Deutsche Welle (DW) that the general downward trend is due to investors re-evaluating US Federal Reserve policy, expecting higher interest rates in response to rising bond yields worldwide. However, he believes the most recent sell-off was specifically driven by concerns over France, where investors were positioning for heightened fiscal risk. French 10-year government bond yields climbed to a 5% level before easing slightly, reflecting growing doubts on the country's long-term financial stability. Since President Emmanuel Macron took office in 2017, France's public spending has increased while he introduced substantial tax cuts, resulting in a rise in national debt over €1 trillion ($1.12 trillion). France's debt-to-GDP ratio now stands at nearly 118%. The country consistently runs a budget deficit exceeding 5%, surpassing the 3.4% threshold when Macron assumed office. In the wake of these fiscal challenges, investors have been flocking to safer alternatives like German government debt. The widening gap between French and German government 10-year bond yields, a key indicator of EU financial stability, has fueled concerns about the euro and other government bond markets, notably Italy's, hinting at the need for the European Central Bank (ECB) to intervene and avoid a potential panic. Deutsche Bank's Jim Reid warned in a recent note that the spread between German and French bonds had become so extreme that a \"mini-panic\" may have occurred last week. The key question now is whether this marks the beginning of a new sovereign crisis in eurozone governments or if market reactions have already reached their peak, he said. Amaro acknowledges the challenge for the ECB, as any overly aggressive response could exacerbate the already strained situation in France's bond yields, further driving down the euro's value. The political and economic pressures in France add to the uncertainty surrounding the situation, with France grappling with political instability and economic issues. The country has faced political crises in recent years, with passing annual budgets proving a significant test of government stability. While the 2027 budget has been approved with reforms aimed at reducing the deficit, the right-wing National Rally party is well-positioned to win the 2027 presidential election, likely led by Marine Le Pen. Concerns over France's economic policies in the event of a Le Pen victory are spooking investors, similar to the impact of the rise of the populist Alternative for Germany (AfD) in Germany. The political instability has been fueled by voter discontent over the high cost of living. In Spain, Prime Minister Pedro Sánchez recently called for early elections following the rejection of housing crisis measures in parliament. Amaro suggests that a weakening euro could exacerbate inflation, as it would increase the cost of imported goods, particularly those priced in US dollars, and potentially lead to higher energy prices and US imports. With the memories of the EU's sovereign debt crisis in the early 2010s still fresh, many observers are now questioning whether the recent French debt movements could signal another crisis in the eurozone. While some, like BNY's Geoffrey Yu, dismiss these concerns as overstated, Amaro emphasizes that the combination of anticipated interest rate hikes from the ECB and a deteriorating inflation outlook makes this situation a pressing matter requiring careful management and monitoring.",
  "summary": "The euro has fallen to a 17-month low against the dollar. That will make inflation worse in the EU, where political worries and concern over French debt are already troubling investors. Is a fiscal crisis at hand?",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "DW English (Top Stories)",
        "title": "Euro plummets against US dollar: has the next financial crisis begun?",
        "url": "https://urgent.news/2026/10/05/euro-plummets-against-us-dollar-has-the-next-financial-crisis-begun",
        "published": "2026-10-05T14:28:00.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}