As the dollar weakens, the euro has the opportunity to take on a more significant role in international financial markets. Let’s discuss the factors contributing to this.
Dollar Weakness: A New Chance for Euro
Since Donald Trump's inauguration, the dollar has lost 10% of its value, creating favorable conditions for the euro. The stability of the dollar is under threat, prompting investors to rethink their strategies. As Thierry Laborde from BNP Paribas stated, "Europe, thanks to its stability and investments, will benefit from the fall of the dollar."
The Dream of a Safe Asset: Reality or Mirage?
The question is whether the euro can become a reserve currency without a worthy safe asset. Historically, attempts to create such assets in the eurozone have failed, but the situation may change. For instance, Germany launched a massive borrowing plan, indicating possible shifts in policy.
Capital and Confidence: Eurozone in a New Reality
Investors are beginning to repatriate capital from the US to Europe amid instability on Wall Street. This creates a domino effect, benefiting the euro. Confidence in the European economy is rising, and interest in government bonds is returning. Many experts agree that the euro could play an important role in global financial markets, especially considering current trends.
The euro has a real chance to strengthen as a significant player on the international stage. The market situation is changing, and whether this impacts the euro's status remains to be seen.
