The Euro has risen over 14% against the US dollar since the beginning of 2025, due to economic and political policies in the United States undermining confidence in the USD.
The Euro is seen as a safer option in the global currency market as tax and trade decisions in the United States create many concerns for investors, driving the shift from USD to Euro.
MAIN CONTENT
New tax and tariff policies in the United States reduce the attractiveness of the USD.
The Euro is expected to increase its role in global foreign exchange reserves as the EU promotes financial integration.
Investors are moving strongly towards the Euro due to concerns about the legal and financial weakness of the United States.
How does US trade policy affect the Euro's trend?
Economists and central bankers at the Aix-en-Provence conference emphasized that the tariff policies and disputes with the Fed under President Trump have reduced the value of the USD, while creating opportunities for the Euro to appreciate.
The increase in US import tariffs has diminished investor confidence, causing capital flows to shift to the Euro as a safer haven, even though the ECB has just cut interest rates.
"The combination of tariffs, attacks on the Fed, and financial pressure from the new US tax package explains the recent decline of the USD."
Yannis Stournaras, Governor of the Central Bank of Greece, 07/2025, CNBC
How do markets and investors react to this development?
International investment reflects the instability in the United States, especially as trade negotiations with the EU drag on without clear results. Although the Fed's interest rates have not changed, investors are still leaning towards the Euro due to declining confidence in the strength of the USD.
International investors view the weakening of legal frameworks and economic pressures in the United States as higher risks, leading to a trend of reducing holdings of US assets.
"We are witnessing a short-term adjustment in investor choices as they react to the weakening of laws in the United States, creating greater risks for assets."
Gabriel Makhlouf, Governor of the Central Bank of Ireland, 07/2025
How can the Euro expand its role in the global foreign exchange market?
According to data from the IMF, the Euro's share in global foreign exchange reserves has remained stable at around 20% for over a decade, while the USD's share has dramatically decreased from 68.8% in 2014 to 57.8% by the end of 2024.
If the EU can finalize the Banking Union and Capital Markets Union projects, the Euro will have a strong opportunity to increase its international role, especially in the context of the NextGenerationEU project promoting borrowing and investment after the COVID-19 pandemic.
Type 2014 End of 2024 Trend 2025 USD's share in global reserves 68.8% 57.8% Continuing to decrease Euro's share in global reserves ~20% ~20%
What risks are causing investors to avoid US dollars?
Experts at Deutsche Bank and ING believe that international investors currently do not want to buy more US assets due to medium-term risks, including pressure on the Fed, increasing budget deficits, and the risk of cutting interest rates too early.
Foreign exchange capital flow data shows a significant decrease in demand for the USD, which is the main reason pushing the Euro into a prominent position in recent months.
Frequently Asked Questions
When did the Euro start to appreciate significantly against the USD? The Euro has risen over 14% against the USD since the beginning of 2025, according to market observers. Why are investors shifting capital to the Euro? Due to tariff policies and monetary instability in the United States creating uncertainty, the Euro has become a safer option. What is the current role of the Euro in the foreign exchange market? The Euro maintains about 20% of global foreign exchange reserves, with potential for growth if the EU completes its internal policies. What are the biggest risks to the USD currently? Legal weakening, disputes with the Fed, and increasing budget deficits are eroding investor confidence in the USD. Could the Euro replace the USD as the primary reserve currency? There is potential if the European Union completes financial projects and maintains policy stability.
Source: https://tintucbitcoin.com/euro-day-nhanh-nho-chinh-sach-trump/
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