Under pressure from elevated energy prices and concerns over France's debt situation, the euro declined against the US dollar on Monday to its weakest level since May of last year.

The euro dropped 0.6% to $1.12 in early Monday trading, bringing its year-to-date loss to 4.8% and a decline of more than 1.6% since the start of last week.

Earlier, French bonds had accelerated their sell-off last week, with the yield on 10-year French government debt rising to 4.9%. Yields move inversely to bond prices and have climbed 1.2 percentage points since the end of June.

Strategists said that amid the sharp rise in borrowing costs, growing support for populist parties in France and Germany has intensified worries about fiscal risk and pushed the euro lower.

Spain may hold an early general election after a flagship housing bill championed by Spanish Prime Minister Pedro Sánchez was rejected last week, adding to the uncertainty.

Eric Robertson, head of global research and chief strategist at Standard Chartered Bank, said: "European politics has really started to deteriorate." But analysts said the current risks are far from the levels seen during the eurozone crisis.

Geoffrey Yu, senior strategist at BNY Mellon, said: "We are cautious on the euro's performance, but the comparison with 2012 does not fit at all."

US fund manager Vanguard warned about France's "deteriorating" credit profile, saying the country has become the focal point of market concerns about European debt sustainability.

Robertson said: "We have seen a real deterioration in the French bond market. France appears to have neither the will nor the ability to put its finances in order."

"Amid weak growth," rising energy prices are pushing up inflation, and with Europe bracing for winter, this is putting additional pressure on the euro.

Yu of BNY Mellon said Spain's early election "is also a risk, but Madrid's economic strength is not a problem at the moment."