October 6, 2026
The euro began the trading week with a sharp decline against the dollar, falling below the $1.12 barrier for the first time in about 17 months, recording its lowest levels in light of pressures resulting from growing economic and political concerns in France, in parallel with investors’ continued appetite for the American currency in search of stability.
A report by journalist Ariel Feiglin in the Israeli newspaper “Maariv” stated that trading in Asian markets was limited due to official holidays in China, South Korea, and parts of Australia, amid the absence of American trading at that stage, which made the market movement governed by European expectations, despite the clear trend of the rise of the dollar against the euro.
News agencies attributed this decline to the worsening debt crisis and political stagnation in France, in addition to the strength of the dollar globally. The yield on 10-year French government bonds jumped to 4.9% on October 1, recording its highest level since 2002, and causing a noticeable widening of the difference between it and German government bond yields.
The European Commission’s forecasts issued last May confirm these pressures, as they indicate that the debt-to-GDP ratio in France will reach 118.1% in 2026, rising to 120.2% in 2027, while the deficit is expected to record 5.1% and 5.7%, respectively, data that was immediately reflected in the markets on Monday morning, as France is one of the largest economies in the Eurozone.
This pressure coincided with continued demand for the dollar globally, even though US employment data weakened expectations of a possible increase in interest rates during the month of October.
In the Israeli market, the euro fell against the shekel, recording trading near the level of 3.40 shekels per euro, compared to the last official price of 3.4419 shekels last Friday. The report explained that this decline is mainly due to the weakness of the European currency against the dollar and not to exceptional strength in the shekel.
Given that the exchange rate of the euro against the shekel is a cross-rate that is affected by the correlation of both currencies with the dollar, the decline of the euro is directly reflected in the trading of the two currencies. Despite this, the euro remains far from its lowest annual level against the shekel recorded last May at 3.25 shekels, which came as a result of the weakness of the shekel against the dollar at that time.
