The euro is not willing to supplant the dollar as an international hegemonic currency, but is facing a unique historical challenge to readjust its power of global influence with the Green ticket American. Paradoxically, it has been the aggressive tariff climb established in the White House by Donald Trump that has delivered such an opportunity in silver tray.
It is not the first. Since its length in the markets, in 1999, the aspiration of the leaders of the community club has always been to become an alternative to the dollar. However, his statement of intentions lasted little. Because in 2000, during the FMI autumnal summit in Prague, a concerted action of the main central banks had to go to cushion its free fall in the exchange markets. Nor would it be the only one.
Brussels also hosted the hope of supplanting the dollar after the 2008 credit collapse to which mortgages led Subprime American reliability and nationalization of Lehman Brothers. But the tsunami Financiero dragged the euro towards a debt crisis that almost ends with its own existence and showed that the ECB was not created to exercise as a lend of the last instance -as the FMI-, which caused massive climbing in the risk premiums of monetary partners in danger of financial rescue, vulnerabilities in the sovereign bonds that moved away from the stability of the stability of the stability of the stability of the stability of the stability of the stability of the stability of bund German and, consequently, a wave of massive withdrawals of deposits.
However, now, the shots seem to have changed. Suddenly. Following the White House return of the Trump administration, the dollar, in just four weeks since its initial euphoria for the inauguration of the Republican president in which the parity with the euro touched several days, has lost a quarter of its value with the European currency. Essentially, by the “aggressive” and “chaotic” tariff political orderly at the blow of decree by the tenant of the oval office. This is described by the market consensus, almost unanimous in its diagnoses on the effects of its sudden weakness.
Among other valuations, the notes to manager and private bank investors emphasize that the dollar has ceased to be a safe refuge for capitals and has precipitated the rotation of portfolios towards latitudes away from Wall Street. The American “exceptionality” with which they defined the constant additional profitability of the American stock markets, seems to be thrown out for a season. Also as a consequence of the high geopolitical voltage and the tense volatility that markets manifest.
The ECB is confident that the euro will win outside muscle
Christine Lagarde, president of the ECB, or Paschal Donohoe, the chief of the Eurogroup that encompasses the euro finance ministers, have been the official voices that have most extolled the rhetoric that the common currency is in a position to strengthen its international status. Although the green ticket accounts for 57% of international reserves, 54% of the export quota and 88% of payment transfers at the beginning of the Trump administration career according to the Atlantic Council’s financial team. Compared to 20%, 30% and 31% portion that corresponds to the euro; Both ahead of the pound, the Yen and the Rhinminbi, the currency that quotes in exchange markets for the Chinese yuan.
Since April 11, the dollar is navigated at a minimum of three years in front of the most representative currency basket, after devaluing over the double digits since the beginning of 2025, in which the exchange experts qualify as “one of the most abrupt alterations from the 2008 bank debacle”. Under an unknown atmosphere for decades in Wall Street in which the strategy of “selling America” reigns, with exceptional profitability leaps of the Treasury Bonus to 30 years, which determines the long -term confidence of the US economy, to touching 5%, symptom of capital leaks that, paradoxically, have fled to Europe and China in a massive way.
The performance jump of the bonds to 30 years, from 4.4% to 4.8% in just one week, the second of April, is the one with the greatest ending since the eighties.
Investors, then, have abandoned US values. Frightened by a dangerous combination of return to commercial protectionism, mass cuts of federal expenses from the Doge office of Elon Musk that do not compensate for strong disbursements in defense or seem enough to justify the future – and generous – fiscal reduction to personal income and benefits of companies that prepare the treasure and much less to cushion the pressure of the debt payment service, which has propelled up to 36.5 billion Dollars, 124% of the highest GDP in the world.
Although also by the geopolitical boiling state, polarization in the largest global market or the attempts of its president to politicize and interfere with the Fed strategy; Sacrosante principle of monetary liberalism that Trump seems willing to fight.
All this adds to unilateralism that governs the decisions of the Trumpist Cabinet and configures the Molotov cocktail that has made Wall Street wobble, which has seen 5 billion dollars leave in the first quarter of the year. More than the GDP of Germany or Japan. These are the signs that Lagarde and Donohoe have interpreted as omens of a change in the global monetary order.
The American tariff climbing goes to the dollar
The head of the ECB points out other conditions. Among others, collateral damage that reciprocal tariffs, tax increases to neuralgic sectors such as steel, aluminum or automotive or essential businesses for technological advancement towards artificial intelligence (AI) such as chips can cause globalization.
Lagarde speaks of risk of Decoupleing commercial, divergence of interest rates and inflationist spiral with activity anemia. “Instability and hatching of prices derived from a permanent shock of supply and protectionist policies,” he explains. In addition to “fragmentation of value chains by geopolitical criteria” that can attempt against the supremacy of the dollar […] and of the euro, its global squire.
In his opinion, in the post cold war, with a favorable geopolitical environment, the global supply became more elastic to changes in domestic demand, which led to a stable and low inflation phase. But now, he explained, the US depends completely on the importation of critical fourteen minerals and world prices would rise about 5% immediately if value chains suffer from a generalized break. In the midst of a tendency to relocate around 45% of companies with external vocation, almost double that in the first quarter of 2024.
All this will affect the monetary frameworks and the international use of currencies, in addition to adding difficulties to central banks. The IMF himself alerted them this week that they are ready to intervene to avoid a financial crisis due to the replicas issued by the markets after the tariff seismic movements caused by the White House. The ECB considers that the new commercial map will generate new alliances and increase currency reserves by 30%.
It is in this context that Frankfurt is also upset by Trump’s interference in the Fed with his direct threat at the exit of Jerome Powell to force him to lower types and spur an economy at risk of recession; Although the law prevents its cessation without just cause.
German take -off with competitive Eurobons
The euro – says Lagarde – “could take advantage of the demand for certain countries that seek to reduce their dependence on the payment systems” with the dollar domain. Although he insists that the most valued condition remains economic solidity, for which the EU must complete the unification of its capital markets, as Enrico Letta requests, and gain productivity and competitiveness as Mario Draghi claims in its reports.
Not to mention it, the ECB returns to the table of the heads of State and Government of the euro zone the Eurobones emissions that Draghi defended in his journey as president of the European issuing bank and throughout his recent diagnosis on the evils that prevent Europe from rival with the US and China. “It is the icing that needs a unique European stock market that emulates Wall Street, a cross -border bank to be really efficient and the ECB to emit world liquidity as the Fed performs in cases of systemic instability,” they say in the Hertie School of the Jacques Delors Center, which would give flight to the international weight to the euro.
Although the other great anabolic that requires the common currency moves the responsibility to its economic locomotive. Germany, reluctant to the Eurobons and mired in a two -year recession, has begun to turn its fiscal policy. Discipline no longer defends the discipline, but contemplates expansive budgets in infrastructure and military expenses to spur its battered GDP. And what is even more positive. Berlin opens, even without widths, to the German bund is the basis of a Eurobled and the global stability alternative of the American bond.
This German third change is attacked, again, the US tariff costs and geopolitical fracture with Washington in the field of defense. Safra Sarasin, chief economist of Karsten Junius, believes that the unequal nature of American taxes “could change the dynamics of currencies” especially those of markets with excessive punishments by the Trump administration, a space that the euro can conquer the dollar.
In the same way that the reciprocal tariffs “have reversed capital flows in the global financial system,” says Brij Khurana, from Wellington Management, because many countries that Washington demands rates greater than 10% are repatriating capital to their markets, which would further weaken the dollar. ” Symphonia SGR manager, the complex refinancing of the American debt this exercise.
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