The Euro has continued to gain value in US trading on May 29, 2025, last recording at 1.1375 US dollars. This development is attributed to several factors:
Causes for the Rise of the Euro
- US Trade Dispute and Tariff Policy: The uncertainty surrounding the US’s tariff policy, especially following a court ruling against extensive tariffs based on an emergency law, has weighed down the dollar. However, a court of appeals temporarily allowed the continuation of these tariffs, initially causing uncertainty.
- Weaker US Economic Data: The number of initial jobless claims in the US rose significantly more than expected. Additionally, it was reported that the US economy contracted slightly more in the first quarter than initially determined – although analysts believe this played a minor role.
- Pressure on the US Dollar: The Greenback is under pressure overall, not least due to a downgrade in credit rating by Moody’s in the previous week and weaker economic data from the US.
Implications for Investors
- Monetary Policy Decisions: A stronger euro can influence monetary policy decisions. The European Central Bank (ECB) could be more cautious with further interest rate cuts or expansionary measures in the case of a persistently strong euro.
- External Trade of the Eurozone: A higher exchange rate makes European exports more expensive and imports cheaper. This can negatively affect the competitiveness of European companies.
- Portfolio Management: For international investors, the risk-return profile of investments in Europe changes compared to those in the US.
Market Forecast
Analysts currently expect a consolidation of the EUR/USD exchange rate between 1.1305 and 1.1375 dollars. Although the upward momentum seems to have weakened, a longer-term range between approximately 1.1255 and 1.1420 is considered feasible.
Summary
The current rise in the Euro against the dollar is primarily driven by political uncertainties in the US as well as weaker economic data. For investors, this means both opportunities and risks – especially regarding monetary policy developments and impacts on trade positions within the Eurozone.