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On October 1, 2026, the euro fell below $1.13 for the first time since May 2025, as markets weighed European growth risks linked to energy costs, French fiscal and political uncertainty, and support for the U.S. dollar from elevated Treasury yields. These were concurrent pressures, not proof that any one factor caused the move. The reported prices and yields below are historical snapshots from October 1, not live figures for October 7.
How far did the euro fall?
Reuters reported that the euro touched a 17-month low and was last down 0.35% at $1.1291 on October 1, 2026. It had declined nearly 2.5% in September, its largest monthly fall since July 2025. These are figures reported at the time, not current exchange-rate quotes. Reuters’ October 1 report described the euro as falling below $1.13 for the first time since May 2025.
Why did energy costs matter for the euro?
Higher energy prices can be a difficult combination for an energy-importing region such as Europe: they can add to inflation while raising household expenses and business costs, which can weaken purchasing power and growth. Reuters reported that concern about this growth risk weighed on the euro, even as rate hikes were expected. Rabobank head of FX strategy Jane Foley said, “This growth risk has been hanging over the euro,” as quoted in Reuters’ October 1 report.
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Oil’s direction depends on the interval being discussed. Although the headline captures pressure from higher oil costs, The Economic Times’ October 1 summary of Reuters said oil prices fell that Thursday after Gulf crude exports recovered and U.S. inventories rose unexpectedly, easing immediate supply concerns. That same-day move does not establish that oil had risen on every relevant interval. The Economic Times account reported the fall.
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How did U.S. Treasury yields support the dollar?
Reuters also pointed to elevated U.S. Treasury yields as support for the dollar. When U.S. yields are relatively attractive, they can bolster demand for dollar-denominated assets and put pressure on the euro-dollar exchange rate. Reuters quoted Ray Attrill, head of FX strategy at National Australia Bank: “The US dollar seems to be showing more sensitivity, just at the moment, to what’s happening with say, 10-year Treasuries, than it is on pricing for when the next Fed rate hike might come,” in its October 1 report.
What did rising French yields signal?
French government bond yields were reported at another 14-year high amid concerns about France’s public finances. The French-German 10-year yield spread—the difference between the borrowing yields investors demand from the two governments—offers one measure of the additional premium demanded for French debt.
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The Economic Times’ October 1 summary of Reuters put that spread at 127.51 basis points after it had widened to 128.80 basis points earlier in the session, its highest level since June 2012. Those are attributed news-report figures, not an independently verified official time series. The widening reflected France-specific fiscal and political concerns alongside broader shifts in rates and inflation expectations; it does not by itself establish that France was in a debt crisis. The Economic Times summary reported the spread figures.
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The reports describe several pressures acting at once, without quantifying how much each contributed to the euro’s decline:
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- Energy and growth: Higher oil costs raised inflation concerns while threatening household purchasing power, business costs, and European growth.
- Relative yields and the dollar: Elevated U.S. Treasury yields supported the dollar, adding pressure to the euro-dollar exchange rate.
- French risk: Fiscal and political uncertainty weighed on French debt, while the wider French-German spread indicated a greater market premium for French borrowing.
Taken together, the explanation is a cluster of related market concerns rather than a single, proven cause. The October 1 figures should not be read as current levels on October 7, 2026.
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