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Dollar set for biggest monthly gain against euro in 14 months; euro hits lowest since May 2025

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The dollar is up nearly 2.5% against the euro in September, its largest monthly rise in 14 months; the euro briefly dipped to $1.1312, its lowest since May 2025. Markets are focused on the US-Europe divergence in growth, rates and energy.

Why it matters

The dollar stood near this year's high versus the euro on Wednesday and is poised for the largest monthly rise against it in 14 months, up nearly 2.5% through September, and is set to notch a third straight quarterly rise. Overnight the euro dipped to $1.1312, its lowest since May 2025, before trading near $1.1339 in Asia. The move underscores the US-Europe divergence in economic growth, interest rates and the energy outlook, Reuters reported on Sept. 30.

Full report

"The US economy is running hot, Europe is losing the global AI race, and energy supplies and French politics remain big concerns for the euro," said Brent Donnelly, president of foreign exchange trading at analytics firm Spectra Markets.

Earlier this month benchmark European gas prices spiked to their highest since 2022. French markets remain under pressure from debt and political gridlock ahead of next year's presidential election, with the spread over German yields blowing beyond 115 basis points, its widest since 2012. Options skew has tipped sharply toward protection against further euro falls, though Donnelly says the dollar probably needs strong US data to make further headway.

The stronger greenback also pushed the Australian dollar below 70 US cents for the first time since early August, with the Aussie slipping to a nine-week low of $0.6959 after inflation data came in a fraction under forecasts. The dollar hit a 16-1/2-month top on the Swiss franc at 0.8358, while the euro is testing support around 178 yen. The dollar has fallen 1.5% against the yen in September, after US-Japan yen buying in July and August and a pickup in the pace of Japanese rate hikes.

Sources: Reuters (Tom Westbrook, Singapore, Sept. 30, 2026).

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