The euro weakened to a 16-month low versus the dollar and dropped for the first time in three days against the yen amid speculation France’s credit rating may be downgraded and Europe’s sovereign debt crisis will worsen. The shared currency declined against 14 of its 16 most- traded peers even after French Finance Minister Francois Baroin denied having been notified by a ratings company that the nation’s top rating will be cut. The euro extended losses as leading members of the European Parliament objected to a planned German-led euro fiscal treaty.

Sterling was the worst performer against the dollar after data showed the U.K. trade deficit increased more than forecast. British retail-store inflation also slowed to the least in 16 months, fueling bets the Bank of England will need to add stimulus to aid the economy.

The pound dropped 1 percent to $1.5329 and fell 0.3 percent to 82.76 pence per euro.

The U.S. currency rose against most of its major peers as investors sought the safety of Treasuries. Yields on 10-year notes dropped to the lowest level in two days, 1.92 percent.

The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, gained as much as 0.7 percent to 81.493, approaching Jan. 9’s 81.503, the highest since September 2010.