Investing.com — Asian currencies were largely under pressure on Monday as the U.S. dollar strengthened, while the euro slumped to a 17-month low as mounting fiscal concerns in France and a selloff in European bonds raised fears of broader contagion.
Trading across Asia was holiday-thinned, with China and South Korea closed for market holidays.
The U.S. dollar index was around 102.48, up 0.5%, while the USD/JPY pair rose 0.2% to 158.10. The EUR/USD pair fell 0.7% to 1.117, after earlier touching $1.116, its lowest level since May 2025. The GBP/USD pair fell 0.3% to 1.320.
The dollar’s strength came despite weaker-than-expected U.S. jobs data that sharply reduced expectations for a Federal Reserve rate hike in October. Markets are now pricing a 78% probability that the Fed keeps rates unchanged this month, up from 36% a week earlier.
Euro sinks as France debt concerns deepen
The euro’s slide has become a major driver of Monday’s dollar strength. The currency has now fallen for four consecutive weeks, with concerns over France’s debt burden and political gridlock ahead of next year’s election adding to pressure on the single currency.
The selloff in French debt has also raised concerns about contagion across European markets.
The broader bond rout last week pushed global borrowing costs to multi-decade highs as investors weighed persistent inflation risks from elevated oil prices alongside deteriorating fiscal positions.
The dollar has benefited from the euro’s weakness even as U.S. rate expectations have eased.
Not finding the right stocks? Our AI’s list of investor-grade stock picks for October just dropped »
The U.S. 10-year Treasury yield was around 5.26%, after briefly reaching a 24-year high last week before some calm returned to bond markets.
Dollar outlook shifts after weak jobs data
Much of the dollar’s strength in recent weeks had come from expectations that the Fed would resume raising rates as inflation stayed elevated.
Friday’s U.S. employment report changed that calculus after job growth slowed more than expected in September.
Markets still expect the Fed to resume tightening in December, followed by another two rate increases in the first half of 2027.
That leaves the dollar supported by longer-term expectations for higher U.S. rates even as the near-term October hike has been largely priced out.
Yen, AUNZ currencies remain under pressure
The yen was around 158.10 per dollar, extending its weakness as the dollar benefited from broader risk aversion and the euro’s decline.
