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Euro slips to weakest level since May 2025 on fragmentation fears

EUR/USD fell to its weakest level since May 2025 as wider Eurozone bond spreads tightened financial conditions.

Reported · Written up by our desk · Major Pairs

FXStreet reports that OCBC’s Christopher Wong said widening Eurozone bond spreads and fragmentation concerns are tightening financial conditions and weighing on the euro.

According to Wong, EUR/USD has fallen to its weakest level since May 2025. He added that rising fragmentation fears are pushing up sovereign borrowing costs and widening risk premia, raising the risk the ECB grows more cautious.

Wong said USD could extend gains if French-German spreads remain wide, noting wider peripheral spreads typically tighten Eurozone financial conditions and weigh on EUR sentiment.

He also pointed out that betting on a disorderly sell-off in European bonds remains risky because the ECB has anti-fragmentation tools that are expected to limit systemic stress, even as financial stability concerns compete with inflation risks.

Latest closeEUR/USD 1.126 ▼0.6%

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