Euro falls to 17-month low as U.S. Treasury yield reaches 5.342%

Oct 1, 2026 06:43 (24d ago)

The euro fell to a 17-month low, with EUR/USD quoted between $1.1242 and below $1.123 after losing more than 2% in September.
The 10-year U.S. Treasury yield reached 5.342%, while three-month euro risk reversals fell to -1.132 and implied volatility rose to 6.45%.
The dollar index held near 102.00 despite lower October Fed hike bets, while European fiscal concerns and the pending payrolls report remained key market drivers.

The euro extended its September decline to a 17-month low as elevated U.S. Treasury yields strengthened the dollar and widened the gap between U.S. and European financial conditions. EUR/USD was quoted between $1.1242 and below $1.123 in different updates, after a more than 2% September loss, while the dollar index rose about 0.6% and traded near 102.00, around a 17-month high. The 10-year Treasury yield reached 5.342%, its highest since 2002, despite markets sharply reducing expected odds of an October Federal Reserve rate increase to roughly 25%–28% from 70% a week earlier. Options markets showed heightened euro bearishness, European bond markets faced fiscal pressure and the eurozone growth outlook remained subdued. Friday’s U.S. payrolls report, expected to show 90,000 jobs, 4.1% unemployment and 3.2% annual wage growth, could shape the dollar’s next move.