Agencies _ The US dollar rose at the start of Asian trading on Monday from levels near its lowest in a month, while violent protests in France exerted pressure on the euro.
The euro fell by 0.1% to $1.1225 as trading commenced in Asia.
The decline in the single currency, which holds the largest weight in the US Dollar Index, helped stabilize the greenback, which traded at 101.83.
French President Emmanuel Macron condemned on Sunday the "shocking" scenes of violence on the sidelines of protests over rising living costs, during a televised address to the nation, a day after one of the worst days of unrest France has seen in years.
Kieran Williams, Head of Asian FX at In Touch Capital Markets in London, said: "The weekend unrest impacts the euro primarily through French bonds rather than exerting a direct impact."
Protests Heightened Investors' Concerns Over the Government's Ability to Pass the 2027 Budget
Popular protests have deepened investors' concerns regarding the government's ability to pass the 2027 budget.
Anxiety shifted from the French streets to European debt markets amid widening borrowing risks and heightened sensitivity toward public finance conditions in the eurozone's second-largest economy.
The monetary policy pursued by the European Central Bank faces a dual test between energy-driven inflationary pressures and slowing growth resulting from tighter financing conditions, according to the latest bank estimates and official statements.
The yield on French 10-year government bonds reached 4.786%, while the 10-year German bund yield recorded 3.440%.
Concerns also extended to Italian debt markets, where the 10-year government bond yield hit 4.471%, while Spain's 10-year government bond yield reached 4.010%.
The French protests, in which nearly 550,000 people participated on Saturday, reflected growing opposition to fiscal consolidation measures after parts of the demonstrations escalated into clashes and acts of vandalism.
The unrest amplified pressure on Sébastien Lecornu's government ahead of budget debates, while Paris aims to reduce its deficit to 5% of GDP in 2027, compared to 5.4% this year.
French Treasury: State Financing Requirements Will Reach €339.7 Billion in 2027
Agence France Trésor announced that state financing requirements will amount to €339.7 billion in 2027, with a medium- and long-term issuance program worth €340 billion, according to its stated plan.
European Central Bank President Christine Lagarde stated on Saturday that rising bond yields are tightening financial conditions compared to what was assumed in the September projections for the eurozone.
Lagarde: Tighter Borrowing Conditions Weaken Households' and Businesses' Ability to Absorb Energy Price Shocks
Lagarde explained that tighter borrowing conditions diminish the capacity of households and corporations to withstand energy price shocks, and could slow economic activity and curb inflation in the coming months.
This assessment comes as ECB officials monitor the potential pass-through of rising energy costs into wages and other prices, without prejudging the direction of the upcoming policy decision.
