Euro heads for fifth weekly loss as oil rebounds and dollar gains

The euro was heading toward a fifth consecutive weekly decline in currency trading on Friday, October 9, as oil prices recovered from earlier losses, Reuters reported from New York. The currency’s retreat came amid concerns about French public finances and US interest rates, while higher energy costs pose risks to euro-area households and businesses.

At the Reuters market snapshot, the euro was down 0.1% at $1.1198 and approximately 0.5% lower for the week. A fifth weekly loss would mark its longest run of declines against the dollar since the start of 2025. Friday’s final exchange-rate close was not established in the report.

The dollar index, which measures the US currency against a basket of currencies, rose 0.13% to 102.25. It was about 0.3% higher for the week and heading toward a fourth consecutive weekly gain, its longest such stretch since May 2025.

Oil rebound adds to competing market pressures

US crude rose 0.6% to $92.04 a barrel after falling as low as $90.01. Brent increased 0.58% to $104.88 after an earlier low of $102.33. Those figures were intraday observations, rather than settlement prices, and captured a reversal of the earlier decline in energy markets.

Crude subsequently recovered as the British navy-affiliated UK Maritime Trade Operations agency said a vessel had been struck by an unknown projectile 13 nautical miles west of Al Jazeera in the United Arab Emirates, according to Reuters. The report did not identify an attacker.

Oil was only one of the pressures traders were assessing. Eugene Epstein, Moneycorp’s head of trading and structured products in Stamford, Connecticut, told Reuters that, when comparing higher oil prices and problems in France, “it is really tough to say what is moving the market more than the other.”

French debt concerns persist despite steadier bonds

The euro had touched $1.1161 on Monday, October 5, a 17-month low, according to Reuters. Investors were concerned about France’s record public debt and the difficult political path to budget cuts, alongside a comparatively robust-looking US economy and currency.

French and Italian government-debt risk premiums nevertheless remained on track to narrow over the week after jumping in late September. Reuters reported that investors were awaiting fresh developments before demanding more compensation for fiscal and political risks. That steadier bond-market backdrop had muted recent selling pressure on the euro.

France’s struggle to reduce its deficit ahead of a divisive election in 2027 remained a concern. Reuters also identified the calling of a Spanish snap election earlier in the week as another source of pressure on the common currency.

Federal Reserve decisions remain unresolved

Epstein described trading as being in a relative holding pattern while investors absorbed Federal Reserve officials’ comments. Reuters reported differing signals: many officials indicated that further rate increases would be needed to curb inflation, while others favoured patience and flexibility rather than immediate action.

Reuters cited CME FedWatch pricing showing a 19.4% probability of an increase of at least 25 basis points at the Fed’s October meeting, compared with an 85.8% probability of an increase at its December meeting. These were market-implied probabilities at that snapshot, not commitments by the central bank.

How energy shocks affect euro-area households and businesses

Earlier analysis offers context for the economic exposure. In his May 13 speech, ECB Executive Board member Philip R. Lane explained that supply-driven oil price increases hurt oil-importing economies through higher production costs, reduced household purchasing power, weaker global demand and uncertainty.

Lane presented modelling in which a geopolitical supply shock initially raising real oil prices by 10% lowered euro-area GDP growth by approximately 0.2–0.3 percentage points in each of the following three years. Both consumption and investment growth weakened, with the effect on investment more pronounced.

That estimate is not a measurement of damage from Friday’s price movement. The model used data from 1985–2023; estimates using a shorter sample starting in 2003 suggested somewhat weaker effects as the euro area’s oil intensity declined. The analysis explains why supply disruptions matter without establishing the eventual economic cost of the latest trading moves.