I’ve been looking at the euro outlook recently and found that the trend over the past twenty years is really quite interesting. From the historical high of 1.6038 in 2008, it kept falling all the way to a 20-year low of 0.9536 in 2022, and then this January it broke through 1.20— the euro’s story is like a scaled-down history of the global economy.

The 2008 financial crisis hit the euro the hardest. Bank systems collapsed, credit tightened, and the economy fell into recession. On top of that, governments across countries took on large amounts of debt to rescue the markets, which directly sparked the European debt crisis that followed. The European Central Bank was forced to cut interest rates and inject liquidity, and the euro entered a bear market lasting for 9 years. By early 2017, the euro had already fallen more than 35% from its peak—at that time, it really was “all the bad news was exhausted.”

2017 was a turning point. The ECB’s quantitative easing (QE) policy began to take effect. The euro area’s unemployment rate fell to below 10%, the manufacturing PMI broke above 55, and economic data clearly improved. Together with the gradual digestion of the uncertainties around Brexit, investors’ attitude toward the EU became more supportive, and the euro rebounded from 1.034. By February 2018, the euro had even surged to 1.2556 at one point.

But this rebound didn’t last long. The Federal Reserve started raising interest rates as the U.S. dollar strengthened; at the same time, economic growth in the euro area slowed, Italy’s politics became unstable, and the euro started to face renewed pressure. Later, when the Russia-Ukraine war broke out, an energy crisis struck Europe, inflation soared, and in September 2022 the euro fell directly to its 20-year low of 0.9536.

Interestingly, starting last year, there were new changes in the euro outlook. The ECB began raising interest rates, and the U.S.-Europe interest rate spread started to narrow. By this January, the euro even broke through the 1.20 level, reaching a new high since June 2021. The driving force behind this rebound was not that the euro itself strengthened, but that the U.S. dollar generally weakened. Trump repeatedly attacked the independence of the Federal Reserve and threatened to add tariffs, and investors began to “sell dollars,” sending funds toward the euro.

Looking ahead, the key for the euro outlook still lies in the divergence between U.S. and European monetary policies. If the Federal Reserve keeps cutting rates while the ECB maintains a steady stance, the narrowing interest rate spread will support the euro. Germany’s large-scale fiscal stimulus is also a positive factor—if it’s implemented smoothly, the euro could rebound in the 1.20–1.25 range.

However, geopolitics and energy prices are variables. If conflicts ease and energy prices fall, the euro area’s trade conditions would improve significantly. Conversely, if conflicts escalate, the risk of stagflation would rise, and the ECB could find itself in a policy dilemma, with funds possibly shifting toward the U.S. dollar for safety.

For investors in Taiwan who want to participate in euro investment, there are several channels. The most direct is through a bank’s foreign exchange account, but usually you can only go long and not short. International forex brokers (CFD platforms) have a low capital threshold and are suitable for small investors. You can also trade euro futures through securities firms or futures exchanges.

Overall, the euro’s mid-2026 trend looks relatively bullish. The continued narrowing of the U.S.-Europe interest rate spread, Germany’s fiscal stimulus moving forward step by step, and easing energy risks all provide support for the euro outlook. But it would still be quite difficult for the market to deliver a sustained, one-way rally. Going forward, it mainly depends on the policy direction of the U.S. and European central banks, the progress of Germany’s budget implementation, and the development of the geopolitical situation.