Euro Hits 17-Month Low Amid French and Spanish Instability

The euro fell to its lowest level against the U.S. dollar in 17 months on Monday, reaching a low not seen since May 19, 2025. The decline follows a combination of political instability in Spain and France, alongside rising inflation and government borrowing costs across the eurozone.

In Spain, Pedro Sánchez is expected to call a snap election as protests over a national housing crisis intensify. Simultaneously, markets are reacting to the fiscal state of France, where a draft 2027 budget has failed to reassure investors. Economists at Barclays and ING argue the budget is insufficient to address structural fiscal problems or meet deficit targets.

Analysts note that leading French presidential candidates have yet to provide detailed plans to reduce expenditure or stabilize the debt ratio. The resulting uncertainty regarding sovereign debt and political leadership in two of the eurozone's largest economies continues to weigh on the currency's value.