French Debt Concerns Send Euro to 17-Month Low Amid Contagion Fears

Euro hits 17-month low as French debt crisis sparks contagion fears across eurozone. Investors flee French bonds for German safe-havens.

Editorial Desk

October 5, 2026 One Min Read

POLICY WIRE — Paris, France — The euro fell to a 17-month low on Monday as France’s worsening fiscal situation sent shockwaves through European bond markets and raised concerns about broader contagion risks within the eurozone.

The single currency hit an intraday low of $1.1161 during Asian trading, marking its weakest level since May 2025. It later traded down 0.68% at $1.1176 against the U.S. dollar, while also weakening against the Swiss franc and British pound. The U.S. dollar index climbed 0.47% to 102.37, reflecting heightened market volatility.

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The gap between French and German 10-year borrowing costs widened to 140 basis points, the largest increase in 17 years, according to LSEG data. French bond futures declined slightly, while German Bund futures rose, signaling a shift toward safer assets. Analysts caution that political uncertainty ahead of France’s 2027 presidential election and rising energy costs are fueling investor anxiety.

Reporting by Policy-Wire (PW)

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