Close Menu
The Politics
    What's Hot

    It’s Hard to Create a Third Party, Even for Elon Musk

    July 7, 2025

    Medical Societies Sue Kennedy and H.H.S. Over Vaccine Advice

    July 7, 2025

    Meghan Markle’s Overselling Disaster: Has She Damaged Her Brand Beyond Repair?

    July 7, 2025
    Facebook X (Twitter) Instagram
    • Demos
    • Politics
    • Buy Now
    Facebook X (Twitter) Instagram
    The Politics
    Subscribe
    Monday, July 7
    • Home
    • Breaking
    • World War
    • World
      • Africa
      • Americas
      • Asia Pacific
      • Europe
    • Sports
    • Politics
    • Business
    • Entertainment
    • Health
    • Tech
    • Weather
    The Politics
    Home»Europe»The euro is soaring — and Trump’s policies could push it even higher
    Europe

    The euro is soaring — and Trump’s policies could push it even higher

    Justin M. LarsonBy Justin M. LarsonJuly 7, 2025No Comments5 Mins Read
    Share Facebook Twitter Pinterest Copy Link LinkedIn Tumblr Email VKontakte Telegram
    Share
    Facebook Twitter Pinterest Email Copy Link


    The euro has seen significant gains against the dollar amid uncertainty around President Trump’s tariffs policies.

    Matt Cardy | Getty Images News | Getty Images

    The euro’s global importance will continue to strengthen this year while political forces fuel further gains against the U.S. dollar, according to central bankers and strategists.

    Speaking at an economic forum in Aix-en-Provence, France, last week, officials at the European Central Bank said that, while the euro may be a long way off threatening the greenback as the top global reserve asset, the currency will increasingly be seen as a stable alternative as long as it has supportive policymaking behind it.

    “If you combine [U.S.] tariffs with the attacks on the Fed and institutions, with the fiscal sustainability of the United States following the ‘beautiful’ tax bill, it explains the evolution of the dollar exchange rate in the recent weeks,” said Yannis Stournaras, governor of the central bank of Greece, during a CNBC-moderated panel on Saturday.

    “Those who impose tariffs will be hurt first,” Stournaras added of the economic impact of higher rates.

    Stock Chart IconStock chart icon

    hide content

    Euro/U.S. dollar.

    As of Monday, the status of a potential U.S.-European Union trade deal remains in limbo, with an update expected over the coming days. The indication from Washington’s early trade deals — including with the U.K. and Vietnam — is that is that White House duties will be broadly higher on all goods coming into the U.S. from overseas than they were at the start of the year, even if they are lower than the rates threatened back in April.

    So far in 2025, broad uncertainty around U.S. tariff negotiations and their impact on the economy and inflation, along with expectations of a fiscal boost in the EU, have driven a roughly 14% increase in the euro against the dollar. These gains have come in despite the ECB cutting interest rates and the Federal Reserve holding them steady.

    U.S. President Donald Trump meanwhile last week managed to pass a sweeping tax and spend bill, scoring a major political victory — which is nevertheless expected to increase the federal deficit, potentially fueling further jitters among U.S. creditors who have already balked at the market chaos around tariffs this year.

    “The status of the dollar is not going to change from one day to another, [but] the euro is in a position to gain in international reserves,” Stournaras continued. That will require the EU to complete its longstanding efforts to form a Banking Union and Capital Markets Union and reduce internal barriers to allow the euro to increase its role in international markets, he said.

    Ireland’s central bank chief, Gabriel Makhlouf, echoed the sentiment.

    “I think what we’re seeing right now with the dollar is a realignment, a readjustment on the part of investors,” Makhlouf said.

    “It’s not so much tariffs, which get a lot of headlines. [Investors are] seeing the rule of law in the United States actually weaken and they are responding accordingly, because that means there’s a greater risk to their investments and their assets, and they’re adjusting.”

    The global proportion of the euro in foreign exchange reserves has held roughly steady for more than a decade, at around a fifth. The U.S. dollar’s share slipped from 68.8% in full-year 2014 to 57.8% by the end of 2024, according to an ECB report published in June, with the exact impact of shifts in 2025 not yet clear.

    Stock Chart IconStock chart icon

    hide content

    U.S. dollar index.

    While the euro isn’t about to suddenly replace the dollar, Makhlouf said it was boosting its global standing and that both the ECB and political leaders needed to take the opportunity to capitalize on that momentum.

    Paschal Donohoe, president of euro area finance minister alliance Eurogroup, told CNBC’s Charlotte Reed that there was going to be a big increase in euro-denominated borrowing in the years ahead, particularly due to the NextGenerationEU stimulus project developed in response to the Covid-19 pandemic.

    “The key thing for us is how we can have strong foundations in place for the euro,” Donohoe said on Saturday, citing stability as one of the most important factors.

    Path ahead

    Euro-U.S. dollar rates in the months ahead are set to fluctuate amid updates on tariffs, monetary policy and more, but should remain broadly supportive for the euro zone currency, strategists say.

    The fact that the recent spike in geopolitical risk and oil prices drove only a small and temporary boost to the dollar highlights its newfound fragility, Francesco Pesole, FX strategist at ING, said in a note on June 26.

    Here's how America's debt spiral could spark the next crisis

    “It’s true that the highly efficient forward-looking FX market never really traded the big risks of a prolonged conflict and sustainably higher energy prices. But that was at least partly due to widespread aversion to holding dollars due to medium-term considerations,” he said.

    Those factors include fiscal concerns, political threats to Federal Reserve independence, or an earlier-than-expected Fed interest rate cut, he noted.

    Deutsche Bank strategists George Saravelos and Christian Wietoska stressed in a July 1 note that the key backdrop to the dollar’s decline was that “foreigners are no longer buying enough dollar assets to finance America’s huge current account deficit.”

    “Foreigners don’t need to sell U.S. assets to weaken the dollar but merely to say ‘no thank you’ to buying more. This continues to be the message of the various high-frequency dollar flow metrics we have,” they said.

    — CNBC’s Chloe Taylor contributed to this story.



    Source link

    Related

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email Telegram Copy Link
    Justin M. Larson
    • Website

    Related Posts

    Europe

    Italian ‘hero’ sniffer dog killed with nail-filled sausages

    July 7, 2025
    Europe

    Russian minister sacked by Putin found dead

    July 7, 2025
    Europe

    Methane gas kills 12 Turkish soldiers in Iraq operation

    July 7, 2025
    Europe

    AI chip startup Groq expands with first European data center

    July 7, 2025
    Europe

    Eurostar train evacuated during eight-hour delay in northern France

    July 6, 2025
    Europe

    Footballers and family lay flowers at funeral of Diogo Jota and André Silva

    July 5, 2025
    Add A Comment
    Leave A Reply Cancel Reply

    • Africa
    • Americas
    • Asia Pacific
    • Breaking
    • Business
    • Economy
    • Entertainment
    • Europe
    • Health
    • Politics
    • Politics
    • Sports
    • Tech
    • Top Featured
    • Trending Posts
    • Weather
    • World
    • World War
    Economy News

    It’s Hard to Create a Third Party, Even for Elon Musk

    Justin M. LarsonJuly 7, 20250

    Building a viable new political party to rival the Democrats and Republicans is enormously difficult…

    Medical Societies Sue Kennedy and H.H.S. Over Vaccine Advice

    July 7, 2025

    Meghan Markle’s Overselling Disaster: Has She Damaged Her Brand Beyond Repair?

    July 7, 2025
    Top Trending

    It’s Hard to Create a Third Party, Even for Elon Musk

    Justin M. LarsonJuly 7, 20250

    Building a viable new political party to rival the Democrats and Republicans…

    Medical Societies Sue Kennedy and H.H.S. Over Vaccine Advice

    Justin M. LarsonJuly 7, 20250

    New restrictions on Covid shots run counter to scientific evidence, the groups…

    Meghan Markle’s Overselling Disaster: Has She Damaged Her Brand Beyond Repair?

    Justin M. LarsonJuly 7, 20250

    Meghan Markle’s Overselling Disaster: Has She Damaged Her Brand Beyond Repair? Source…

    Subscribe to News

    Get the latest sports news from NewsSite about world, sports and politics.

    Advertisement
    Demo
    Editors Picks

    Review: Record Shares of Voters Turned Out for 2020 election

    January 11, 2021

    EU: ‘Addiction’ to Social Media Causing Conspiracy Theories

    January 11, 2021

    World’s Most Advanced Oil Rig Commissioned at ONGC Well

    January 11, 2021

    Melbourne: All Refugees Held in Hotel Detention to be Released

    January 11, 2021
    Latest Posts

    Review: Russia’s Putin Sets Out Conditions for Peace Talks with Ukraine

    January 20, 2021

    Review: Implications of San Francisco Govts’ Green-Light Nation’s First City-Run Public Bank

    January 20, 2021

    Queen Elizabeth the Last! Monarchy Faces Fresh Demand to be Axed

    January 20, 2021
    Advertisement
    Demo
    Editors Picks

    It’s Hard to Create a Third Party, Even for Elon Musk

    July 7, 2025

    Medical Societies Sue Kennedy and H.H.S. Over Vaccine Advice

    July 7, 2025

    Meghan Markle’s Overselling Disaster: Has She Damaged Her Brand Beyond Repair?

    July 7, 2025

    Dow closes down 420 points as Trump unveils new tariffs

    July 7, 2025
    Latest Posts

    Review: Russia’s Putin Sets Out Conditions for Peace Talks with Ukraine

    January 20, 2021

    Review: Implications of San Francisco Govts’ Green-Light Nation’s First City-Run Public Bank

    January 20, 2021

    Queen Elizabeth the Last! Monarchy Faces Fresh Demand to be Axed

    January 20, 2021
    Advertisement
    Demo
    Facebook X (Twitter) Pinterest Vimeo WhatsApp TikTok Instagram

    News

    • World
    • US Politics
    • EU Politics
    • Business
    • Opinions
    • Connections
    • Science

    Company

    • Information
    • Advertising
    • Classified Ads
    • Contact Info
    • Do Not Sell Data
    • GDPR Policy
    • Media Kits

    Services

    • Subscriptions
    • Customer Support
    • Bulk Packages
    • Newsletters
    • Sponsored News
    • Work With Us

    Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    © 2025 The Politics Designed by The Politics.
    • Privacy Policy
    • Terms
    • Accessibility

    Type above and press Enter to search. Press Esc to cancel.