Driven by political and fiscal instability in major European countries including France and a surge in energy prices, the value of the euro against the dollar has fallen to its lowest level since May of last year.

According to Bloomberg and Reuters, in the Asian foreign exchange market on the 5th (local time), the euro dropped by 0.8% from the previous session to as low as $1.1161, and is currently trading down 0.6% at around the $1.12 level in the London foreign exchange market as well.

The euro has fallen for four consecutive weeks against the dollar through last week, and is down nearly 5% so far this year.

In Spain, large-scale protests against housing shortages have raised expectations of a snap general election, which further rattled France's already anxious bond market amid uncertainties over the budget and fiscal stability ahead of next year's presidential election.

Last week, the yield on 10-year French government bonds surged to 4.9%, and on the 2nd, the spread between 10-year French and German government bonds widened to 1.5 percentage points (p), the largest gap since 2011. This indicates that investors prefer safer German bonds over French debt.

According to traders, short-term investors in the Asian market sold spot euros to buy dollars, which also led to option-related trading.

The market is on guard against the possibility that the European bond market crisis could spread to a broader weakening of the eurozone. The Financial Times (FT) reported that expectations are also emerging in the market that the European Central Bank (ECB) will take action to prevent France's debt problem from spreading across the entire eurozone.

Eric Robertson, chief strategist at Standard Chartered, pointed out, "The European situation has truly begun to deteriorate," adding, "France appears to lack the will or ability to get its finances in order, and high energy prices are driving up inflation at a time of sluggish growth, adding further pressure to the euro."