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.
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.
