US Treasury yields were climbing to their highest since 2007 as the euro slipped below $1.13 on Thursday, its weakest level in 17 months. “This is broad-based dollar strength on rising yields,” said Win Thin, chief economist at Bank of Nassau 1982.
The euro touched $1.1215 against the dollar, its lowest level since May 2025. It fell 2.6% during September, its largest monthly decline since July 2025.
The move reflected a widening gap in financial conditions on either side of the Atlantic. The dollar strengthened nearly 2% against the euro in September as expectations of a Federal Reserve rate increase in October rose above 70%.
The two-year Treasury benchmark closed in on 5%, supporting the dollar. Treasury yields also recorded their largest quarterly increase since 1994, during a global sovereign bond selloff that lifted yields in both the US and Europe.
September’s rise in US yields helped push the Bloomberg Dollar Spot Index up about 2%, close to multi-month highs. By the end of the month, the dollar had posted its sixth consecutive quarterly gain against a basket of currencies, its longest run since 2022.
Europe brought a separate source of pressure. France is preparing for a hotly contested election next year, while the far-right AfD party made gains in German regional elections.
French government bond yields rose to a 14-year high as the global selloff coincided with concern over political instability in France. The premium investors demanded to hold French debt rather than German debt exceeded 110 basis points.
Jane Foley, head of foreign-exchange strategy at Rabobank, said: “This growth risk has been hanging over the euro.”
Elevated crude oil prices added to the selling pressure by reviving inflation concerns across the eurozone.
Morgan Stanley analysts expect the greenback to retain its dominance through year-end.
Comments (0)