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Why the euro was the big winner in foreign exchange in 2025
Key Takeaways (30s Read)
In 2025, the euro rose 13.3% against the dollar, becoming the top G10 currency amid changing fiscal policies.
The euro's rise in the foreign exchange market in 2025 was influenced by a marked shift from previous disappointing growth. Starting the year at 1.02, it climbed to 1.17 by year's end, driven by a change in Germany's political landscape, with a focus on growth-oriented policies after pressure from geopolitical challenges. Additionally, Spain's economic performance, leading the IBEX to a staggering 49% increase, added to the euro's attractiveness. If the ECB manages rate-cutting effectively while spurring growth, the euro could see further gains ahead. The focus now lies on policy execution to maintain this upward trajectory.
AI Analyst
AI Opinion
"The euro's rise reflects a significant departure from years of economic underperformance, showing that well-timed policy shifts can quickly restore market confidence. Germany's pivot toward pragmatic policies in response to geostrategic pressures has enabled a resurgence in capital inflows, particularly given the eurozone's low valuations. However, the sustainability of this growth remains contingent on effective policy implementation by the central bank, which needs to navigate interest rate changes wisely. Spain's robust economic performance further bolsters the euro's prospects, supporting growth expectations moving forward, especially as 2026 approaches."
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