Dollar hits 17-month high against euro as bond selloff drives yields higher

Money & Banking··USEU·Read original
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The dollar strengthened to a 17-month high against the euro, amid a selloff in U.S. and European government bonds that pushed U.S. Treasury yields to new highs, while rising oil prices added to inflation pressure. The euro weakened below 1.123 dollars per euro for the first time since May 2025, and was last down 0.87% at 1.1229 dollars, having fallen nearly 2.5% in September, its largest monthly decline since July 2025. The yield on 10-year U.S. Treasury bonds touched its highest level since 2002 before falling more than 5 basis points to 5.239%, while French government bond yields jumped to a 14-year high on concerns about France's weak fiscal position, and German government bonds also faced selling pressure. Brian Daingerfield, head of G10 foreign exchange strategy at NatWest Markets, said the higher yields stemmed from concerns about fiscal policy, weakness in the French bond market, and worries about energy prices and rising inflation, with the market still expecting central banks including the Federal Reserve to continue tightening monetary policy. The pound fell 0.6% to 1.3186 dollars after dropping 2.1% in the past month, and was steady against the euro at about 85.11 pence per euro, its weakest level since late June.

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