After looking at the euro’s 20-year performance, it’s definitely worth taking a deeper look.

When it comes to the euro, 2008 was a key moment. At that time, the financial crisis broke out, and the euro against the dollar briefly surged to a historic high of 1.6038, before starting to trend downward. The shockwaves—such as the collapse of the banking system triggered by the U.S. subprime mortgage crisis, credit tightening, and an economic recession—spread quickly to Europe. The European Central Bank was forced to cut interest rates and launch quantitative easing, which also put downward pressure on the euro. On top of that, the later euro debt crisis brought debt issues in countries such as Greece and Portugal to the surface. At one point, market confidence in the euro fell to a near-bottom.

The real turning point came in 2017. After nearly 9 years of decline, the euro against the dollar fell to around 1.034. But by then, the ECB’s easing policies began to take effect: the eurozone’s unemployment rate dropped back to below 10%, the manufacturing PMI broke above 55, and economic data improved significantly. Combined with progress in Brexit negotiations and expectations that elections in France and Germany would turn out favorably, market sentiment toward Europe shifted toward optimism. The euro had already been severely oversold, and most of the negative factors had played out, so the rebound had strong momentum.

However, this rebound didn’t last for long. In 2018, the Fed began raising interest rates and the U.S. dollar strengthened, while eurozone economic growth slowed down again—especially as Italy’s political situation remained unstable, which hit market confidence. By 2022, the Russia-Ukraine war broke out, along with Europe’s energy crisis. The euro against the dollar fell to 0.9536 at one point, setting a new 20-year low. During that period, the magnitude of the euro’s depreciation was truly astonishing.

Interestingly, in the past one or two years, the euro’s performance has changed again. In early 2025, the euro was indeed somewhat weak, dropping to around 1.02. The main reasons were the eurozone’s not-so-optimistic economic outlook, Germany’s economy shrinking for a second consecutive year, expectations that the European Central Bank would cut rates significantly, and the Fed moving more cautiously on rate cuts—expanding the interest-rate spread between the U.S. and Europe and driving capital toward the U.S. dollar. On top of that, the tariff threats after Trump was elected also put pressure on the euro.

But the turning point showed up after March. By the end of January 2026, the euro against the dollar broke above 1.20— the first time it had stood above that level since June 2021. This rebound wasn’t because the euro itself was especially strong, but because the U.S. dollar broadly weakened. Trump repeatedly attacked the Fed’s independence, threatened allies with increased tariffs, and investor concerns about U.S. policy grew. A “sell U.S.” sentiment emerged, and capital started to flow out of U.S. dollar assets. At the same time, monetary policy diverged between the U.S. and Europe: the Fed was expected to keep cutting rates, while the European Central Bank could keep rates unchanged due to relatively stable inflation in Europe. As the U.S.-Europe interest-rate spread narrowed, international funds increasingly preferred to flow into the eurozone.

Looking ahead to the next 5 years, I think several variables are especially important. First is the divergence in U.S.-Europe monetary policy—this is the most crucial factor affecting the euro exchange rate. If the Fed keeps cutting rates while the ECB stays steady, the narrowing interest-rate spread could drive euro appreciation. Second is Germany’s fiscal expansion plan—if it is carried out smoothly, the eurozone economy may improve, and the euro against the dollar has a chance to rebound into the 1.20-1.25 range. The third variable is geopolitics and energy prices. If tensions ease and energy prices fall, it would be a major positive for the eurozone and could clearly improve trade conditions.

Overall, my preliminary judgment is that the euro’s trend in 2026 will be somewhat stronger. In particular, if the Fed continues to cut rates, the U.S.-Europe interest-rate spread keeps narrowing, and energy prices fall while geopolitical risks ease, the euro’s rebound momentum would be more pronounced. In the long run, with these structural factors providing support, the euro has the potential to maintain a relatively solid performance. Of course, sustaining an uninterrupted one-way strong rally is still quite challenging, simply because there are too many variables.

If you want to invest in the euro, there are actually quite a few ways. You can open a foreign exchange account through a bank, or trade CFDs through international forex brokers, with relatively low capital requirements. Alternatively, you can also go through securities firms or futures exchanges. Which approach to choose mainly depends on your investment scale and trading style.

Going forward, you still need to keep an eye on changes in the U.S.-Europe interest-rate spread, the progress of Germany’s fiscal stimulus implementation, and risks related to geopolitics and energy. All of these factors will directly affect the euro’s subsequent performance.