The barometer results are a vote of confidence in Europe’s standing against other major world powers at a time when many parts of the world are either ravaged by war or grappling with unprecedented trade tensions.
A raft of U.S. policy changes in recent months have spooked investors, leading to them limiting their exposure to the dollar. Instead, many have flocked to the euro and European markets more broadly.
She added that for the currency to leverage the status quo, Europe must build on its geopolitical, economic, and legal base. “As a major actor in global trade, Europe already has a key ingredient of a strong geopolitical foundation, creating the potential for a virtuous circle of euro internationalization to unfold.”
The British pound has also benefited from the volatility in the U.S. since the start of 2025.
“We’re now seeing a bit of a reversal where people are more optimistic about the return and earnings prospects in Europe,” the investment bank noted.
A confluence of reasons explains the new injection of hope in the European region, including greater fiscal spending in Germany driven by new government reforms and defense outlays that will prepare Europe for the changing world order. Such forms of stimulus have helped European assets and the euro outperform their peers as they elevate the region’s growth prospects.
Europe’s financial standing also feeds into its citizens’ trust in the institution, versus declining trust in national governments, underscoring the bloc’s importance even despite a marked growth in Euroscepticism recently.
To be sure, the Eurobarometer survey involved over 26,000 interviews between March 26 and April 22 when concerns over Trump’s tariffs and their fallout were highest. Since then, there have been flare-ups, adding to volatility—for instance, Trump threatened to impose 50% tariffs on the EU as their negotiations with the region were progressing slowly.
The EU is under pressure to strike a deal that will protect it from the harsh tariff impact while appeasing Trump into not jacking up duties in the future. It previously threatened reciprocal tariffs but postponed them after the American president suspended any charges for three months.
“We haven’t heard directly from President Trump on the matter yet, so it’s unclear how the administration might respond going forward,” Deutsche Bank’s Jim Reid wrote in a note Thursday. “This could also have broader revenue implications, as they had been hoping to use tariffs as a source of revenue to fund other tax cuts.”
The U.S. dollar jumped following the ruling, and Goldman Sachs’ global foreign exchange strategist wrote in a note that “it is likely to provoke broader relief across risk markets.”
But given that the underlying reason for the dollar’s pain this year has been oodles of uncertainty, that doesn’t look like it’s changing anytime soon.
That gives Europe more opportunities to cash in on the moment and maybe, in time, seize the “global euro moment” that Lagarde has identified.
