The euro fell to a 17-month low against the U.S. dollar as investors grew increasingly worried about France’s high debt and political uncertainty. 

French 10-year bond yields approached 5%, while the gap between French and German borrowing costs widened sharply, raising concerns about a possible return of eurozone debt-crisis dynamics. 

Spain added to the uncertainty after Prime Minister Pedro Sánchez called a snap general election for November 29 following the defeat of his government’s housing measures. 

Investors are particularly concerned that political divisions could make it harder for France and other heavily indebted countries to reduce their budget deficits, potentially spreading financial stress across the eurozone, Euro News has reported.

The turmoil is also creating a challenge for the European Central Bank, which must balance rising inflation with concerns about government borrowing costs and financial stability.