The Euro's Global Value Will Continue to Decline This Year as Political Parties Seek to Preserve Additional Gains Against the US Dollar, Central Bankers and Strategists Say **** the US dollar, central bankers and strategists quoted by CNBC said.
ΠDuring an economic forum in Ex-en-ΠRovans, France, last week, officials from the European Central Bank said that while the euro may be far from overtaking the dollar as the world's main reserve asset, the currency will increasingly It is perceived as a stable alternative, as long as it has a supportive policy behind it.
"If you combine the US tariffs with the attacks on the Federal Reserve and the institutions, the US fiscal sustainability will be 'overwhelming' tax bill, this explains the evolution of the exchange rate of the Cyprus pound to the dollar in recent weeks", said Yannis Styrnapac, governor of the Central Bank of Greece.
"Those who impose tariffs will suffer first", Styrnapac added, referring to the economic impact of the higher rates.
On Monday The potential trade agreement between the US and the EC remains "up in the air", with news expected in the coming days. The indication from Washington's recent trade deals - including with Britain and Vietnam - is that the White House's tariffs on all goods coming into the US from abroad will be significantly higher than they were at the beginning of the year, even if they are lower than what Trump threatened in April.
By 2025 The widespread uncertainty surrounding the negotiations and their impact on the economy and inflation, together with expectations of a fiscal stimulus in the EC, led to an approximately 14% increase in the euro against the dollar. These gains come despite the ECB cutting interest rates and the Federal Reserve keeping them steady.
US President Donald Trump, meanwhile, managed to pass a sweeping tax and spending bill last week, scoring a major political victory - although it is expected to increase the federal deficit, potentially extending additional worries among American creditors, who are already facing market chaos over tariffs this year.
"The dollar's status is not going to change overnight, but the euro is in a position to gain in international reserves," Styrnapac continued. This will require the EC to complete its long-standing efforts to create a banking union and a capital markets union, as well as to reduce internal barriers, to allow the euro to expand its reach in international markets.
The governor of the Central Bank of Ireland, Gabriel Masliff, shared this view: "What we are seeing now with the dollar is reorientation, reassessment by investors. It's not so much the tariffs that attract a lot of headlines. Investors are seeing the rule of law in the US as truly weakening and are reacting accordingly, as this means greater risk for technical investments and assets."
The euro's global share of foreign exchange reserves has remained roughly stable for more than a decade - around one-fifth. The share of the US dollar has decreased from 68.8% in 2014. to 57.8% by the end of 2024, according to an ECB report published in June.
Although the euro will not suddenly replace the dollar, Masliff said the currency is gaining ground globally and that both the ECB and political leaders should seize the opportunity to capitalize on this momentum.