Euro Weakens Against Dollar as French Unrest and AI Stock Rally Drive Currency Shifts

Key summary

The euro fell against the US dollar on Monday in New York forex markets amid investor concerns that civil unrest in France could worsen the country's economic and fiscal conditions. The dollar strengthened following a recovery in artificial intelligence (AI) technology stocks, pushing the Dollar Index up 0.14% to 101.98. The euro dropped to $1.1212 from Friday's $1.1233, while the pound fell to $1.3305 from $1.3319. The dollar also gained against the yen and Swiss franc but weakened against the Canadian dollar. Recent protests in France involved approximately 550,000 people on Saturday, with 2,397 arrests and 997 police injuries reported by the French Ministry of Interior. French Prime Minister Sebastien Lecornou announced curfew measures for certain areas starting Monday evening following looting during weekend demonstrations. Protests have been ongoing since September, driven by demands for educational improvements, inflation relief, and better public services. The unrest is seen as potentially benefiting Marine Le Pen's National Rally party in next year's presidential election, raising questions about France's EU membership given her anti-EU stance. The dollar also benefited from expectations that the Federal Reserve might raise interest rates in December to combat inflation, with CME Group's FedWatch Tool showing 90% probability for a rate hike then versus an 82.8% chance of holding rates this month. Additionally, the US National Association of Home Builders reported a housing confidence index dropping to 29 in October, the lowest since June 2012, due to rising mortgage rates, material costs, oil prices, and labor shortages.