The euro rises – and Trump’s policy can push it even higher

According to central bankers and strategists, the global value of the euro will continue to strengthen, while political forces are fueled against the US dollar.

Speaking at the Economic Forum at AIX-EN-PROVENCE, France, last week, the European Central Bank officials said that although the euro may be a long way, threatening green appeals, since the main world asset, the currency will be increasingly considered as a stable alternative while it supports the policy behind it.

“If you combine (US) tariffs with attacks on the Fed And institutions, with the financial stability of the United States after the “beautiful” tax bill, explains the evolution of the dollars in recent weeks, “said Greek Governor Janis Sternaros, Governor of the Central Bank of Greece on Saturday.

“Those who impose tariffs will be suffered first,” said Sternoras about the economic impact of higher rates.

As of Monday, the status of a potential trading transaction of the US-European Union remains in suspended statewith an update that is expected in the coming days. Indicating the early trading deals in Washington – including with UK and Vietnam – It is that the responsibilities of the White House will be widely higher than all the goods coming to the US from the border, than at the beginning of the year, even if they are lower than the rates that threaten in April.

So far, in 2025, the broad uncertainty around us is tariff talks and their impact on the economy and inflation, as well as expectations a Fiscal stimulus in the EUThey led to an increase in the euro by about 14% to the dollar. These profits came in spite of Interest rates of the ECB and The federal reserve system that keeps them steadily.

Last week, US President Donald Trump managed to convey sweep tax and spend an accountKilling the main political victory – which, however, is expected Increase federal deficitpotentially fueled additional shivers among US creditors having Already stamped on the chaos market Around the tariffs this year.

“The status of the dollar will not change from one day to another (but) euro able to receive in international reserves,” Starnaras continued. This will require the EU to complete its long -standing efforts to create a banking union and capital markets and lowering domestic barriers to allow the euro to increase its role in international markets, he said.

The head of the Ireland Central Bank, Gabriel Makhluf, repeated the mood.

“I think what we see with the dollar now is a perestroika, a perestroika from investors,” Makhluf said.

“These are not so much tariffs that get a lot of headlines. (Investors) see the rule of law in the US actually weaken, and they respond accordingly because it means that they have more risk for their investments and assets.”

The euro’s world share in currency reserves has been about more than ten years, about the fifth. US dollar share in full year decreased with 68.8% 2014 to 57.8% by the end 2024, according to the ECB report published in June, with the exact impact of shifts in 2025 is not yet clear.

While the euro does not suddenly replace the dollar, Mahlof said he raised his global position and that both the ECB and political leaders should take advantage of this impetus.

Pashal Donaho, President of the Eurogroup Finance Minister, said Charlotte Reid CNBC that in the coming years there would be a large increase NEXTGEENrationeu The stimulation project is designed in response to the COVID-19 pandemic.

“The main thing for us is how we can have strong basics for the euro,” Donahoe said on Saturday, calling stability one of the most important factors.

The fact that the recent spike in Geopolitical risk and Prices for oil Only a small and temporary stimulus to the dollar, which highlights its new fragility, Francesco Pesol, FX strategist, said in a note on June 26.

“It is true that the high-efficient FX market has never traded high risks of long conflict and sustainable higher energy prices. But this is at least in part, because of the broad disgust for dollars due to medium-term opinions,” he said.

These factors include financial problems Political threats of the Federal Reserve IndependenceEither earlier than expected, a decrease in the Fed’s interest rate, he noted.

Deutsche Bank strategists George Saravel and Christian Vietoska emphasized that on July 1 it is noted that the key background of the dollar decline was that “foreigners no longer buy enough dollars to finance the huge current account in America.”

“The United States does not need to sell the US assets to weaken the dollar, but just say” don’t thank you “to buy more. This continues to be a message from different dollar streams,” they said.

– CNBC Chloe Taylor contributed to the story.