The euro fell to its weakest level in 17 months, slipping below $1.123 against the dollar as surging U.S. Treasury yields widened the gap between U.S. and European financial conditions. The dollar index gained about 0.6% while the benchmark 10-year Treasury yield touched 5.342%, its highest level since 2002, extending a bond-market selloff that posted its largest quarterly increase since 1994. Higher yields increase the return available on dollar-denominated assets, attracting global capital and strengthening demand for the currency. Because the euro has the largest weighting in the U.S. Dollar Index, its decline can reinforce broader dollar gains and tighten conditions for commodities, emerging markets and other dollar-sensitive assets. European bond-market pressure, including French 10-year yields approaching 5% and wider spreads over German debt, has added to the euro's weakness. UK and Japanese long-term borrowing costs have also reached multi-decade highs, while Brent crude near $100 has kept inflation pressure elevated in energy-importing economies. The euro's near-term recovery depends heavily on whether U.S. yields remain above 5%; a substantial decline could reduce the dollar's advantage and allow EUR/USD to recover. Softer U.S. inflation has reduced expectations for an immediate Federal Reserve hike, but long-term yields remain influenced by inflation risk, government borrowing and heavy bond supply.