Euro skids toward fifth weekly fall but selling pressure slows

SINGAPORE: The euro was headed for a fifth straight weekly drop on Friday, though there were ​signs the selling streak was losing momentum as France’s tumbling debt market stabilised and a decline in ‌US yields took some steam out of the dollar’s rally.

The common currency had hit a 17-month low of $1.1161 on Monday on market worries about France’s record high debt load and the difficult political path to budget cuts, in contrast with a robust-looking US dollar ​and US economy.

It has since recovered to trade at $1.1211, for a fall this week of 0.3% and a ​five-week drop of more than 3% on the dollar.

The euro/sterling cross is also down 0.3% ⁠on the week to trade near a 16-month low at 84.74 pence. The euro/Swiss cross has steadied around 0.9324 ​francs per euro after notching last week its biggest weekly fall in 17 months.

“My take is all the moves are ​pretty stretched,” said Matt Simpson, senior analyst at StoneX in Brisbane.

“You probably only get two or three big moves a year on the euro and this has been one of them… but bearish momentum is waning (and) I’d tread really carefully at these lows.”

France’s far-right presidential ​candidate Marine Le Pen presented plans this week to cut the budget deficit, which markets took as reassuring given hard-left ​rival Jean-Luc Melenchon has asked the central bank to cancel government debts.

French students blockaded high schools and marched through cities on Thursday ‌in ⁠the latest wave of protests about education conditions, highlighting the tricky balance for leaders between demand for social spending and leery markets.“France’s bond sell-off and the social unrest are now operating in a feedback loop,” said Macquarie strategists Thierry Wizman and Gareth Berry in a note to clients.

“An intensification of the street riots could lead to higher bond yield spreads.”

Elsewhere, ​the dollar’s moves were small ​and gains slowed as US ⁠yields headed for their biggest weekly drop in about three months, with the market rallying strongly overnight.

Dollar at 17-month high as global bond rout hits euro

The yen headed for a fourth straight weekly drop, though moves in the ​last three of those weeks have been very small as it has steadied around ​158 yen to ⁠the dollar.

Vishnu Varathan, head of Asia-Pacific macro strategy at Mizuho Securities in Singapore, said the dollar sat in a “precarious pole position, flattered by a dismal euro and yen.”

The Australian dollar hovered at $0.6960 and sterling at $1.3233.

The New Zealand dollar is on its ⁠longest losing ​streak in more than four years, as it heads for a seventh ​straight weekly decline thanks to how low New Zealand interest rates are — at 2.75% — compared with a Fed funds rate between 3.75% and 4%.

The ​kiwi sat at $0.5601 and is not far from breaking its 2025 low of $0.5485.