The euro stayed pinned at $1.1198 on Thursday after losing 0.6 per cent overnight. Strains in the French bond market drove the fall.

Bank of France head Emmanuel Moulin said the country’s economic situation was serious. But he reassured investors that France did not need help from the European Central Bank.

French 10-year yields have climbed near 4.75 to 4.96 per cent. Investors worry about France’s budget deficit ahead of the 2027 election. The French-German yield spread has widened sharply. France is on course for a 5.4 per cent deficit this year against a 5 per cent target.

The euro sank to $1.1161 earlier in the week, its weakest level in 17 months. Speculators held a record 301,000 short euro contracts in the week to September 29. European gas storage sits at 71.5 per cent full, well below last year’s 82.6 per cent.

The dollar was the main beneficiary. Its index rose to 102.22, near an 18-month peak. The yen sat at 157.90, protected by the threat of intervention. A break below $1.1161 could push the euro toward $1.1065, analysts said.