Recently, I reviewed the euro's performance over the past 20 years and realized it has truly experienced many ups and downs. From the 2008 financial crisis to the subsequent euro debt crisis, and to recent geopolitical shocks, each event has rewritten the euro's destiny. I want to discuss why predictions about the euro's trend in 2022 and similar topics have remained so popular—it's because this currency influences the global markets.

Speaking of the 2008 wave, the euro against the dollar once surged to a historic high of 1.6038, and no one expected it to fall so dramatically afterward. The US subprime mortgage crisis erupted, and the European banking system immediately came under pressure, with credit tightening spreading rapidly. Businesses and consumers couldn't borrow money, leading to an economic recession, and large amounts of capital started flowing back to the US. Although the European Central Bank implemented rate cuts and quantitative easing, these measures instead accelerated the euro's depreciation. Later, debt issues in countries like Greece and Portugal surfaced, causing confidence in the entire eurozone to collapse.

By early 2017, the euro finally rebounded. At that point, it had fallen more than 35% from its 2008 high, essentially exhausted its downside. The euro debt crisis was largely resolved, and ECB's easing policies began to take effect. The eurozone's unemployment rate dropped below 10%, manufacturing PMI broke through 55, and economic data showed clear improvement. Coupled with positive market sentiment from the French and German elections that year, and optimistic expectations during the early Brexit negotiations, capital started flowing back into euro assets. In February 2018, the euro briefly surged to 1.2556, hitting multi-year highs.

However, the good times didn't last. The Federal Reserve began raising interest rates, strengthening the US dollar index, and the eurozone's economic growth started to slow. Italy's political instability added further pressure. The story that followed is well known— the euro declined all the way to 0.9536 in September 2022, hitting a 20-year low. At that time, the Russia-Ukraine war had just broken out, risk aversion was at its peak, and Europe's energy crisis further battered the euro.

Interestingly, in the second half of 2022, the situation began to turn around. The ECB started raising interest rates, ending eight years of negative rates. The Russia-Ukraine conflict did not worsen further, and international energy prices gradually declined. These factors combined to support the euro's rebound.

By early 2025, the euro fell again to around 1.02, mainly due to the eurozone's bleak economic outlook, with Germany contracting for two consecutive years and manufacturing in disarray. Meanwhile, the Fed's pace of rate cuts was slow, while the ECB was set to increase easing, widening the interest rate differential and causing capital to flow into the dollar. Additionally, after Trump took office, tariff threats posed greater pressure on eurozone exports, which are heavily export-oriented.

But by January 2026, the situation reversed again. The euro briefly broke above 1.20, reaching a high not seen since June 2021. This time, it wasn't because the euro was particularly strong, but because the dollar was broadly weakening. Trump repeatedly attacked the Federal Reserve's independence, causing investor concerns over US economic policies, and a "sell US" sentiment emerged. Capital started flowing out. Plus, the Fed was expected to continue cutting rates, while the ECB might hold rates steady or even shift toward a more cautious stance. The narrowing of the US-Europe interest rate gap made euro assets more attractive.

Looking ahead, the key factors that have been discussed since the start of 2022 in euro trend forecasts remain relevant. First, the divergence in monetary policies between the US and Europe is the most direct influence on the euro. Second, Germany's fiscal expansion plans, if implemented smoothly, could improve growth expectations in the eurozone and potentially push the euro-dollar exchange rate to the 1.20–1.25 range. Third, geopolitical issues and energy prices have a dual impact—if tensions ease, it’s bullish for the euro; if they worsen, it could increase stagflation risks.

Honestly, a one-way bullish trend for the euro is challenging. But supported by these structural factors, a relatively stable performance can be expected. If you want to invest in euros, you can do so through bank forex accounts, forex brokers, securities firms, or futures exchanges. Among these, forex brokers typically have the lowest capital requirements, making them suitable for small investors testing the waters.

My personal view is that as long as the US-Europe interest rate differential continues to narrow and energy risks ease, the euro's rebound momentum will become more evident. However, it’s crucial to closely monitor the Fed’s rate cut pace, the actual implementation of Germany’s fiscal stimulus, and geopolitical developments. Any change in these variables could rewrite the euro’s trend story.