Euro Falls Toward 17-Month Low

The euro weakened below $1.12, moving closer to a 17-month low of $1.116 touched earlier this week, as oil prices rebounded amid renewed Middle East tensions and fiscal concerns continued to weigh on sentiment. Brent crude rose back above $100 a barrel as Iran intensified attacks on shipping in the Strait of Hormuz, reinforcing expectations of further interest-rate hikes from major central banks. Markets now price roughly 75 basis points of ECB and 85 basis points of Fed hikes by the end of next year. Meanwhile, French bonds remain under pressure as political uncertainty ahead of the 2027 election raises doubts over the country’s ability to repair its finances. The minority government has unveiled a plan to cut the budget deficit, although the fiscal watchdog warned that its economic assumptions were “optimistic.” Political uncertainty is also rising elsewhere, with Spain calling a snap election for November 29 and Italy heading to the polls next year.