The euro is on course for a fifth straight weekly decline against the dollar. Reuters reports that early gains faded on Friday, October 9, as oil prices erased earlier declines. Selling pressure was muted, though, as France's bond market steadied.

Key Numbers

  • EUR/USD: about $1.1198, down roughly 0.5% on the week. It would be the longest run of weekly declines since the start of 2025.
  • 17-month low: $1.1161, hit on Monday, October 5.
  • Dollar index: 102.25, up about 0.3% on the week and heading for a fourth straight weekly gain, its longest run since May 2025.
  • Yen: the dollar rose to about 158.25 yen. The yen is on pace for a fourth weekly decline.
  • Sterling: $1.3235, on track for a seventh straight weekly loss, its longest since November 2024.

Why the Euro Is Slipping

  • French debt: investors worry about France's record public debt and the difficult political path to budget cuts ahead of a divisive 2027 election.
  • Spain: the calling of a snap election earlier in the week added pressure.
  • US strength: a robust-looking US economy and currency contrast with euro zone concerns.
  • Oil: a confluence of higher oil prices and French worries makes it hard to say which matters more, said Moneycorp's Eugene Epstein.

The Oil Whiplash

Oil fell early Friday after President Trump said the US would not attack Iran before the November 3 midterm elections and that there had been productive talks with Tehran. Prices then recovered after the UKMTO reported that a vessel was struck by an unknown projectile 13 nautical miles west of Al Jazeera in the UAE. In late trading, US crude rose 0.6% to $92.04 a barrel and Brent gained 0.58% to $104.88.

The Fed Factor

Markets are waiting on Federal Reserve speakers, and the dollar's sensitivity to their comments is high. According to Rallies, which cites the same report, markets priced in a 19.4% chance of a Fed hike of at least 25 basis points at the October meeting and an 85.8% chance of a hike in December. French and Italian risk premiums were on track for a weekly decline after rising in late September.

What to Watch Next

  • US CPI and PPI data due October 14 and 15.
  • The Fed's October 27-28 meeting.
  • French bond spreads and further budget news.
  • Oil prices and Middle East headlines.

Key Takeaways

  • The euro is heading for its fifth straight weekly loss against the dollar.
  • French debt, Spanish politics and oil all weigh on sentiment.
  • Fed rate expectations keep the dollar supported.