US Dollar Eyes Fourth Weekly Gain as Euro Slips on French Deficit

The U.S. dollar is heading for its fourth straight week of gains, supported by expectations of further Federal Reserve rate increases and European fiscal concerns, while the euro faces a fifth consecutive weekly decline amid France's budget deficit fears.

"Paris must fix its finances through domestic budget consolidation rather than expecting emergency European Central Bank intervention," said Bank of France Governor Emmanuel Moulin in a statement regarding the ongoing fiscal pressures.

Dollar Index and Weekly Gains

The U.S. Dollar Index closed at 102.21, edging up 0.07% on Friday. According to a report from Investing.com, this move extends the dollar's longest weekly winning streak since May 2025.

Meanwhile, the euro fell 0.17% to close around $1.1194 on Friday. The single currency is on track for its fifth consecutive weekly decline, pressured by worries over France's projected 5.4% budget deficit and political gridlock surrounding its 2027 draft budget.

Federal Reserve Rate Expectations

The strength in the greenback is underpinned by shifting interest rate expectations in the United States. According to CME FedWatch data, expectations for a 25-basis-point interest rate increase at the Federal Reserve's December meeting remain firmly entrenched above 84%.

Sovereign Debt and European Pressures

Broader Asian foreign exchange markets remained relatively muted as traders processed the diverging monetary policy outlooks between the U.S. and European economies. The combination of persistent U.S. economic strength and European fiscal instability has widened sovereign yield spreads, steering capital flows toward dollar-denominated assets.

The political standoff in Paris over fiscal consolidation continues to weigh heavily on investor sentiment across the eurozone. With French officials emphasizing domestic adjustment over external rescue measures, currency markets are pricing in prolonged political risk for the region.