The euro fell to its weakest level since May 2025, dropping as much as 0.8% to 1.1161 per dollar in Asian trade. Hedge fund selling and reports of a potential early election in Spain intensified concerns about political instability in the region. French bond yields surged, with the premium over German bunds reaching levels not seen since 2011, signaling deep investor unease.
Fast-money funds in Asia drove the sell-off in spot trading, triggering further options-related selling. Strategists at JPMorgan, including Meera Chandan, warned the euro had not yet priced in the widening of French OATs and remained vulnerable, particularly against the Swiss franc and yen. The euro fell for a third session against the franc, down 0.5%.
The dollar strengthened as markets bet on more Federal Reserve rate hikes. The Bloomberg Dollar Spot Index hit a high not seen since late June. Analysts at Malayan Banking Berhad, including Fiona Lim, noted the focus had shifted to the Eurozone’s fiscal health, especially in highly indebted peripheral economies, further supporting the dollar.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing