The euro slipped to $1.145, its weakest level since late July, as rising oil prices dampened risk appetite and the US dollar stayed firm on expectations of additional Federal Reserve interest rate hikes. Brent crude rebounded after briefly hitting its lowest level since September 10, with persistent tensions in the Middle East keeping investors focused on energy supplies and potential diplomatic initiatives at this week’s UN meetings.
Political and fiscal jitters in the euro area added to the pressure on the single currency. In Germany, the governing CDU suffered its worst-ever result in a state election in Mecklenburg–Western Pomerania, failing to secure a single seat. The setback has prompted some party members to urge Chancellor Friedrich Merz to resign after just 16 months in office. In France, meanwhile, public finances remain in the spotlight as the government struggles to rein in a budget deficit in excess of 5% of GDP, ahead of a contentious election next year.
