World's largest investors are betting on euro rise

Major investment companies believe that a surge in value of the European single currency is just at the beginning. For more than a decade, global capital has been flowing into the dollar, bypassing the euro. However, investors now expect this trend to reverse.

Despite the unpredictability of tariff decisions of the US president, Andreas Koenig from Amundi thinks that it will be difficult to stop the active movement of capital into European assets, which begun in April. Last month, the euro hit $1.15, its highest since late 2021.

European policymakers are seeing an opportunity to increase the euro's share in global reserves. The euro now accounts for only 20% of the reserves, while the dollar accounts for about 60%.

The strengthening of the euro is caused by two factors. Germany is to issue additional government bonds worth $1.1 trillion. In addition, the US administration has tightened its tariff policy, undermining the dominance of US assets.

Asset managers, including Amundi, are changing their negative outlook for the euro to a positive one. Deutsche Bank, which had expected the euro to fall below parity with the dollar, now forecasts it to rise to $1.2 by December and to $1.3 by the end of 2027.