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Dollar hits 17-month high as safe-haven demand rises in Europe
EURUSD slid about 1.0% intraday to its lowest level since May 2025, signaling capital flight toward safe-haven assets.
The US dollar rose to a 17-month high as safe-haven demand increased amid an escalating fiscal crisis in Europe, according to Action Forex.
The outlet linked the move to concerns that France’s draft budget, which targets reducing the deficit from 5.6% to 5.0% of GDP in 2027 via about €54 billion in spending cuts, may be difficult to approve in parliament.
Action Forex also pointed to diverging US and European bond yields and noted that the yield spread between French and German bonds is approaching 150 basis points, a level seen near the end of 2011.
While expectations for Federal Reserve tightening in October have eased, with the probability of tightening falling to 22% after comments from New York Fed President John Williams and Fed Vice-Chair Philip Jefferson about a possible pause, the dollar continued to strengthen alongside moves such as a 1.0% intraday plunge in EURUSD and a 1.7% drop in EURCHF.