Euro acted as safe-haven currency in 2025-early 2026, says ECB

The euro demonstrated its role as a safe-haven currency during periods of risk aversion in 2025 and early 2026, appreciating in value, according to a report by the European Central Bank (ECB). This behavior contrasted with the dollar, which depreciated during these times.

One instance cited by the ECB occurred on April 2, 2025, when the Trump administration introduced tariffs. This action triggered significant volatility in global financial markets and a notable appreciation of the euro against traditional safe-haven currencies like the Swiss franc and the Japanese yen. The ECB report also noted similar euro appreciation following the U.S. Department of Justice issuing grand jury summonses against the Federal Reserve in early 2026, and threats from the U.S. to increase tariffs on European imports amid rising tensions over Greenland.

Conversely, the ECB report highlights that the euro's exchange rate has depreciated since the outbreak of war in the Middle East, coinciding with a rise in oil prices. Despite this, the international use of the euro saw moderate growth in 2025, reaching 20%. This continues a gradual but steady upward trend observed since Russia's invasion of Crimea in 2014, with the euro maintaining its position as the world's second most important currency.

ECB President Christine Lagarde cautioned against complacency, noting the increasing forces of fragmentation and strong demand for gold from central banks due to geopolitical tensions. The report also points to advancements in alternative cross-border payment systems using digital technologies and an increasing use of non-traditional currencies like the Chinese renminbi in international trade invoicing. Lagarde highlighted that international debt issuance denominated in euros reached a post-creation high in 2025, increasing by 30% from 2024, and that the euro has become the leading currency in the international green and sustainable bond market.

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But at the same time, there is no room for complacency. The forces of fragmentation are becoming more pronounced. Geopolitical tensions continue to drive strong demand for gold from central banks.