NEW YORK: The euro rebounded on Tuesday and was on pace for its strongest move higher in a month after falling to its lowest in 17 months in the prior day, as a pullback in French government bond yields cooled fears about strain in euro zone debt markets.
The euro zone’s currency climbed 0.28 percent, on track for its biggest daily gain since September 3, at USD1.1252. the currency had slid to its lowest since May 2025 on Monday at USD1.116, following a drop of more than 1 percent in the prior week, its fourth straight weekly decline.
The dollar index, which measures the greenback against a basket of currencies, fell 0.26 percent to 101.89 and was on pace for its biggest daily drop since September 25.
Bond markets around the world have seen yields rise due to expectations of sharp central bank rate hikes as energy prices have jumped due to the US-Israeli war with Iran and fanned inflation, as well as concerns about government finances.
French debt has seen pressure mount as politicians struggle to curb the budget deficit ahead of a divisive election in 2027. The calling of a snap election in Spain added to the recent pressure on the euro.
A drop in energy prices helped French bonds rally on Tuesday, with key 10-year yield down 8 basis points on Tuesday at 4.7824 percent.
Crude prices fell as rising Middle Eastern crude exports and a G7 emergency stockpile release eased supply concern as Saudi-backed Yemeni government forces staged a lightning advance on Monday to retake the coast around the Bab el-Mandeb Strait up to the city of Mocha, the government said.
Far-right French presidential candidate Marine Le Pen, who leads the polls, on Tuesday increased her plans to reduce spending to €140 billion (USD158 billion) from €125 billion in savings originally planned if she wins power in 2027.
The fall in the dollar offered helped buoy other currencies, with sterling up 0.39 percent to USD1.327 after climbing to a one-week high of USD1.3283.
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