Euro slides to 17-month low

The euro hit its lowest point in 17 months on Thursday, as investors battered European assets in light of the impact on the regional economy from higher oil prices and inflation, while mounting political uncertainty added to an uncertain backdrop.

The European currency fell below $1.13 for the first time since May 2025 against the dollar, which has been in ascendance for the past couple of months, thanks in part to the largest quarterly rise in Treasury yields since 1994. The euro also sank against the yen, the Swiss franc and barely held in positive territory against the pound, as yields on French debt, which has been hounded by worries about France’s shaky finances, surged to another 14-year high.

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And even benchmark German debt came under fire.

The euro fell 0.3 percent to $1.1299.

It declined nearly 2.5 percent in September, marking its largest monthly decline since July 2025. Europe is facing a range of political uncertainties as well, with a hotly contested French election next year, as well as increasing pressure on Germany’s chancellor after a series of gains by the far-right AfD party in regional elections.

Data on Wednesday showed US inflation rose less than expected in August, along with downward revisions to July’s figure, which lowered expectations for a Federal Reserve rate hike this month.

But a surge in euro zone inflation underscored the threat that higher energy prices continue to pose to the global economy.

“This growth risk has been hanging over the euro,” Rabobank head of FX strategy Jane Foley said.

“And despite the fact that the ECB was one of the first central banks in the G10 to hike interest rates, despite the fact that it’s expected to go again, the euro hasn’t been able to get traction.”

“It’s been bogged down by the fact that positions were very long and by this concern about (Europe) being an energy importer and then of course, at the margins certainly going into next year, you’ve got these political concerns.”