Recently, I’ve been organizing ten years of data on the euro’s trend and found some interesting patterns worth sharing.

Looking back over these ten-plus years, the euro has experienced quite a few ups and downs. The 2008 financial crisis was a watershed moment; at that time, the euro against the US dollar surged to a historic high of 1.6038, but later, due to banking system pressures, credit tightening, economic recession, and a series of issues, coupled with the European Central Bank being forced to implement large-scale easing, the euro began a long depreciation trend. Back then, the debt crisis of the PIIGS countries also surfaced, and market confidence in the eurozone plummeted.

Interestingly, in early 2017, the euro hit a low of 1.034 before rebounding. Why? Mainly because the ECB’s easing policies started to take effect, the eurozone’s unemployment rate fell below 10%, and manufacturing PMI surged past 55, with economic data showing clear improvement. Plus, that year’s French and German elections led markets to expect pro-euro governments to come into power, and Brexit negotiations also began to ease market concerns. These positive factors combined, and after the euro was severely oversold, it rebounded. By February 2018, the euro once rose to 1.2556, hitting a multi-year high.

But the good times didn’t last. The Federal Reserve started raising interest rates, the eurozone’s economic growth slowed, and political instability in Italy added pressure on the euro. The real shock came in 2022. The Russia-Ukraine war broke out, energy prices in Europe soared, inflation in the eurozone spiked, and the euro briefly fell to 0.9536, hitting a 20-year low. Fortunately, the ECB later raised interest rates, energy prices gradually declined, and the euro stabilized.

What’s interesting is the recent trend. At the start of 2025, the euro briefly dropped near 1.02, mainly due to weak eurozone economic growth, consecutive recessions in Germany, sluggish manufacturing, and the Fed’s slower rate cuts compared to the ECB, which widened the US-Europe interest rate differential, leading capital to flow into the dollar. But since the beginning of this year, the situation has reversed. Trump repeatedly attacked the Fed, threatened tariffs, which undermined dollar confidence, and capital started “selling the US.” Meanwhile, markets expect the Fed to continue cutting rates, while the ECB might hold steady due to stable inflation, narrowing the interest rate gap and supporting the euro’s appreciation. The euro against the dollar once broke through 1.20, reaching a high not seen since June 2021.

Looking ahead five years, I believe the ten-year pattern of euro movement shows that the key still depends on the divergence between US and European monetary policies. If the Fed continues to cut rates while the ECB remains on hold, the narrowing interest rate differential will support the euro. Plus, if Germany’s large-scale fiscal expansion proceeds smoothly and growth expectations in the eurozone improve, the euro could rebound to the 1.20–1.25 range.

However, geopolitical issues and energy prices are also variables. If Middle Eastern tensions ease and energy prices fall, that would be a big positive for the eurozone, improving trade conditions, lowering corporate costs, and boosting the economy. Conversely, if conflicts escalate, the risk of stagflation rises, and the ECB might face a dilemma, with funds possibly shifting to the dollar for safe-haven purposes.

For those interested in investing in euros, there are several options. You can open a forex account through a bank, or trade CFDs via international forex brokers, which usually require lower capital. You can also find related products through securities firms or futures exchanges.

Personally, I think the euro will trend somewhat stronger this year, especially if the Fed continues to cut rates, the US-Europe interest rate gap narrows further, energy prices decline, and geopolitical risks ease. The rebound momentum for the euro could become more evident. In the long term, under structural support, the euro should maintain a relatively stable performance. Going forward, it’s important to keep an eye on changes in the US-Europe interest rate differential, Germany’s fiscal progress, and geopolitical risks.