Dollar depreciation poses threat to earnings of European large-cap companies — Citigroup

Since the beginning of 2025, the euro has appreciated against the dollar by almost 13%. At the same time, the Bloomberg Dollar Index has fallen by 9% from the peak reached in January. Now, it is at its lowest level in more than three years.

Citigroup experts note that strengthening of the European currency may have a negative effect on the performance of companies in the region. According to their analysis, a 10% rise in the euro against the dollar could lead to a drop in profits in Europe by about 2%.

For large European companies, which receive more than a quarter of their revenues in North America, the blow to earnings could be significant. Further, according to experts, the negative impact will extend to European stock indices.

According to Susana Cruz, strategist at Panmure Liberum, the most vulnerable sectors in these circumstances are healthcare, consumer services and goods, luxury goods, and software. At the same time, financial services, real estate, and insurance look relatively protected as their earnings are less exposed to dollar volatility, she added.