Euro drops to 17-month low as political and fiscal risks rise

• The euro dropped to a 17-month low as growing political and fiscal concerns in the region weighed on investor sentiment. The shared currency fell as much as 0.8% to touch 1.1161 per dollar in Asian trade on Monday.
• Fast-money funds in Asia reportedly sold the euro for dollars in spot trading. That pushed prices past barrier levels, triggering options-related selling that compounded the fall, according to Bloomberg.
• "The French politics trade that many expected would escalate this winter as April 2027 elections neared … ​is here now," said Brent Donnelly, president of foreign exchange trading at analytics firm Spectra Markets, as per Reuters.
• "It’s not completely ⁠obvious what might fix things here as any budget promises made by the French government now are not super credible with a change of ​power coming soon."
• French bond futures dipped 0.13%, close to record lows it has been hugging in the past few weeks. The yield on US 10-year Treasury notes was at 5.262%, as some calm returned following a spike to a 24-year high last week that rattled markets.
• Sterling, too, slipped 0.24% to $1.32064, ​while the Japanese yen changed hands at 157.92 per dollar (DXY). That left the dollar index, which measures the US currency against six major units, ​up 0.47% at 102.37.

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