The euro fell in the European market on Tuesday against a basket of global currencies, extending its losses for the second consecutive session against the US dollar and nearing a two-week low recorded in the previous session, following stunning political developments in France, the eurozone’s second-largest economy.
French Prime Minister Sébastien Lecornu and his cabinet resigned on Monday, just hours after the announcement of his new government, marking the shortest-lived administration in modern French history and sparking fresh political uncertainty.
Price Overview
• Euro exchange rate today: The euro fell 0.25% against the dollar to $1.1677, down from the opening price of $1.1708, after recording a session high of $1.1715.
• On Monday, the euro closed 0.3% lower against the dollar, its third decline in four sessions, hitting a two-week low of $1.1652 amid the French political turmoil.
Resignation of Sébastien Lecornu
Sébastien Lecornu resigned as France’s prime minister in a surprise move that shocked the political landscape, stepping down only hours after unveiling his new cabinet, turning it into the shortest government in France’s modern history.
The withdrawal came despite efforts to form an executive team balancing economic reforms with social demands. However, Lecornu faced strong resistance from parliament and political groups opposed to policies tied to President Emmanuel Macron’s previous term.
Observers believe Lecornu may have failed to secure sufficient parliamentary support to pass his agenda, while pressure to form alliances with other factions and opposition to certain economic measures—such as deficit reduction or potential tax increases—contributed to his resignation.
Political Developments in France
Lecornu had been appointed earlier that same day in a last-ditch attempt to form a new government after weeks of complex negotiations following the early parliamentary elections in July 2025.
The elections produced a deeply divided parliament, with no party or coalition securing a majority, leading to political gridlock. Lecornu, a prominent political figure, was chosen to lead a consensus-driven government aimed at restoring stability and addressing France’s pressing economic and social challenges.
His resignation deals a heavy blow to President Emmanuel Macron, who already faces waning popularity and mounting political challenges. The current situation raises doubts about the French government’s ability to implement effective policies to address key issues such as rising energy costs, economic growth support, and maintaining competitiveness within the European market.
Bleak Outlook
The political upheaval is expected to delay negotiations on the European Union’s budget, where France plays a key role in shaping fiscal policy for the bloc.
The situation may also affect investor confidence in French bonds, as yields on French government debt have edged higher, signaling heightened perceived risk.
Analyst Commentary
• Sarah Ying, head of FX strategy at FICC, said: “The resignation of France’s new government is not an existential crisis, but it doesn’t look good domestically, particularly given the ongoing budget debates.”
• She added: “The greater risk would be a resignation from President Macron himself, though that currently seems like a low-probability scenario.”
