The long stretch of subdued nights for the euro under the dominant shadow of the US dollar may be coming to an end. European Central Bank President Christine Lagarde has acknowledged that the euro remains a secondary player on the global currency stage but signaled a clear intention to change that narrative.
In 2025, the euro posted a strong rally, largely driven by capital outflows from US assets amid ongoing political instability in Washington. Investors seeking refuge turned toward gold and European securities, giving the euro both a safe-haven appeal and unfamiliar momentum. However, as capital flowed into Europe’s comparatively smaller equity and bond markets, volatility surged, underscoring the region’s underdeveloped market infrastructure.
Lagarde has laid out a more assertive vision for the euro, emphasizing that it should evolve from a reactive currency to one that helps shape the global monetary landscape. While acknowledging concerns that a stronger euro could erode European exporters' competitiveness, she believes that the ECB has tools to manage such pressures.
Crucially, Lagarde did not shy away from highlighting the structural issues still holding Europe back. Fragmented bureaucracy, inconsistent tax policies, and underperforming capital markets remain stumbling blocks to the euro’s ambition as a global financial force.
