- The euro fell 0.65% to $1.1185 amid concerns over France's fiscal health
- French 10-year bond yields rose 14.9 basis points to 4.8959%, signaling risk
- The US dollar strengthened ahead of Fed minutes with the dollar index at 102.33
The euro slid towards a 17-month low on Wednesday as renewed concerns over France's fiscal health weighed on the currency, while the US dollar strengthened ahead of the release of minutes from the Federal Reserve's latest policy meeting.
Reuters reported that the euro fell 0.65% to $1.1185, moving closer to the 17-month low touched on Monday. Pressure on the common currency came as French government bond yields jumped sharply, reflecting growing investor concerns over the country's finances.
The yield on France's 10-year government bond surged 14.9 basis points to 4.8959%, putting it on track for its biggest one-day rise in two weeks. By comparison, Germany's 10-year bond yield rose just 0.8 basis point to 3.489%.
“The focus is on Europe, and it's a very, very negative one,” Juan Perez, senior director of trading at Monex USA in Washington, told Reuters.
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Perez said Europe's long-standing high spending, coupled with rising energy costs, was increasingly weighing on its economic outlook.
According to Reuters, the dollar also gained ground as investors looked to the minutes of the Fed's September meeting for clues about the central bank's next policy moves. The Fed raised interest rates at that meeting for the first time since 2023, with policymakers focused on persistent inflation.
The dollar index, which measures the greenback against a basket of major currencies, rose 0.41% to 102.33.
The minutes are expected to reveal a broader debate among Fed policymakers than was apparent from the unanimous decision to raise rates. Recent comments from several officials have supported further rate increases, although New York Fed President John Williams and Fed Vice Chair Philip Jefferson have argued for patience.
Markets have sharply reduced expectations for another rate hike this month. The probability of at least a 25-basis-point increase at the Fed's October meeting fell to 21.6%, from around 38% a week ago, according to CME FedWatch. However, traders are pricing in an 82.8% chance of a hike in December.
Higher oil prices also supported the dollar, with energy markets responding to continued Middle East supply risks and a storm approaching US oil-producing regions.
“We already kind of understand the dynamic that in a time when it's difficult to access energy resources, the US dollar is going to spike,” Perez said.
Elsewhere, sterling fell 0.45% to $1.3212 but strengthened to its highest level against the euro since June 2025. The dollar was little changed against the yen at 158.16.
Reuters reported that Bank of Japan policymaker Ayano Sato, meanwhile, said she supported raising interest rates in several stages, signalling a preference for a gradual approach to policy normalisation.
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