Euro Heads for Monthly Gain on Strong Eurozone Data

The euro remained under pressure around $1.122, as rising French borrowing costs and worsening tensions between the US and Europe over Russia’s war in Ukraine weighed on sentiment. France’s 10-year OAT yield climbed above 5%, its highest level since 2002, reflecting mounting concerns over France’s public finances and social unrest. Meanwhile, relations between Washington and European allies have deteriorated as US President Donald Trump deepens his engagement with Russian President Vladimir Putin. Recent moves, including easing sanctions on Moscow and questioning Ukraine’s political leadership, have heightened uncertainty over Western unity and future support for Kyiv. Elsewhere, rising oil prices amid the ongoing Iran war have intensified inflation concerns and increased expectations of tighter monetary policy, weighing on Europe’s growth outlook. Political uncertainty ahead of key elections across major European economies has added to the pressure on the single currency.

European stocks fell on Tuesday, with the STOXX 50 declining 0.7% to trade at low levels not seen in about four months and the STOXX 600 losing 0.4%, extending the previous session’s losses of nearly 1%. Sentiment remained subdued amid renewed pressure on AI-related stocks and concerns over elevated valuations in the sector. Rising oil prices and continued concerns over political unrest and instability in France also weighed on European markets. Among individual stocks, ASML Holding dropped 2.8%, while Siemens fell 3.0%. Schneider Electric declined 3.6%, Safran lost 1.3%, and Siemens Energy slipped 2.5%. ABB tumbled 4.5% despite reporting third-quarter results broadly in line with market expectations. On the other hand, Novartis (0.6%), SAP (0.9%), Sanofi (1.6%) booked gains.

The euro hovered around $1.12, near multi-month lows, as escalating social unrest across France, Italy and other European countries heightened concerns over fiscal stability and political uncertainty. In France, authorities imposed curfews in several cities on Monday in an effort to contain nationwide anti-government protests, adding to pressure on President Emmanuel Macron during the final months of his term and potentially complicating efforts to implement austerity measures ahead of the 2027 elections. In Italy, the government announced plans to deploy 500 troops following several days of unrest. Geopolitical tensions also intensified after Ukrainian President Volodymyr Zelenskyy accused US President Donald Trump of pressuring Kyiv to make concessions to Russia. On the monetary policy front, the ECB and the Federal Reserve are both widely expected to leave interest rates unchanged at their upcoming meetings later this month, with markets anticipating possible rate hikes in December.