Euro gains dramatically: What drove the currency to highs?

Euro gains dramatically: What drove the currency to highs?

The euro is experiencing an all-time high and has not surpassed the US dollar in 16 years! In recent days, the value of the euro has risen over 4 percent against the dollar, marking its biggest weekly increase since March 2009. This came as the dollar index, which measures the dollar's strength against several global currencies, fell 3.4 percent to 103.90 points - a reading that marks its lowest level since November 2022, as kosmo.at reported.

The reasons for this dramatic change are various factors in US trade policy. US President Donald Trump has imposed significant tariffs on goods from Canada, Mexico and China in recent days, causing great uncertainty in the market. His tariffs could put a strain on the dollar and jeopardize its role as a global reserve currency. In contrast, in Germany, significant policy measures have been announced by the CDU and SPD to strengthen the economic and defense budget, which will provide additional support for the euro, such as Stuttgart News explained.

These political measures and their consequences

The two major German parties are planning financial packages that are intended to stimulate economic growth not only through higher defense spending, but also through a comprehensive infrastructure program. These decisions signal solidarity to the outside world and could further strengthen the euro in the long term. While the US Federal Reserve is under pressure to keep interest rates stable in the face of high inflation, the European Central Bank appears to have reached the end of its rate cutting cycle, which could help further stabilize the euro.