Euro Falls Amid French Debt Crises

(RTTNews) - The euro weakened against other major currencies in the Asian session on Monday, as worries over France's mounting debt and political block are burdening the EUR currency, ahead of the election next year.

With the benchmark 10-year government bond yield increasing above 4.9% and nearing its highest level in decades, French borrowing costs have increased in parallel with global yields.

Additionally, it is anticipated that France's debt-to-GDP ratio will increase from 119% this year to 122% next year. Furthermore, despite the already generous pension system consuming an ever-larger portion of the budget, far-right leader Marine Le Pen, who is leading in the presidential polls, has called for tax cuts and promised to lower France's retirement age to as low as 60. This worsens market concerns and keeps the Euro vulnerable.

Moreover, spiking bond yields and heightened uncertainty in the Middle East conflict weighed on market sentiment. weaker-than-expected U.S. monthly jobs data led to optimism the US Fed may hold off on raising interest rates later this month.

Saudi-backed forces in Yemen have launched a full-scale military operation to retake areas controlled by the Houthis, an Iran-backed group. The Houthis seized control of Bab el-Mandeb, a strategic chokepoint between the Red Sea and the Gulf of Aden. Saudi Arabia had been using this route to export oil while avoiding the Strait of Hormuz.

In the Asian trading today, the euro fell to nearly a 3-month low of 0.8460 against the pound, nearly a 1-1/2-year low of 1.1161 against the U.S. dollar and nearly a 1-year low of 176.41 against the yen, from Friday's closing quotes of 0.8498, 1.1254 and 177.65, respectively. If the euro extends its downtrend, it is likely to find support around 0.82 against the pound, 1.10 against the greenback and 175.00 against the yen.

Against the Australia and the Canadian dollars, the euro dropped to nearly a 2-week low of 1.6090 and nearly a 5-month low of 1.5949 from last week's closing quotes of 1.6181 and 1.6037, respectively. The euro may test support near 1.59 against the aussie and 1.58 against the loonie.

Against the NZ dollar and the Swiss franc, the euro edged down to 1.9972 and 0.9277 from last week's closing quotes of 2.0019 and 0.9326, respectively. On the downside, 1.97 against the kiwi and 0.91 against the franc are seen as the next support levels for the euro.

Looking ahead, PMI reports from various European economies and the U.K. for September and Eurozone PPI for August are slated for release in the European session.

In the New York session, U.S. and Canada PMI reports for September are due to be released.