Euro left Bitcoin behind: Is the new global power against the US dollar?
The euro/dollar parity increased by more than 13 %in the first half of the year and achieved the same performance as Bitcoin. Germany's giant infrastructure plan and the FX Hedge increase in Europe remove investors from US assets.
📈 Euro has exceeded Bitcoin performance: Is the new alternative to the dollar?
The perception of investor in global markets is changing. Recently, the EURO/DOLLAR (EUR/USD) parity drew attention with its rise over 13 %, leaving Bitcoin’s performance behind. In June, the euro increased by 4 %and reached 1.1786, and Bitcoin increased only 2.4 %in the same period.
This rally is supported by Germany’s giant infrastructure investments and increasing foreign exchange hedge rates throughout Europe.
🧱 Germany’s new financial plan: EURO is increasing confidence
Germany has launched a historical financial expansion focusing on the defense and climate transition with a infrastructure fund of 500 billion euros. This plan supports growth in the euro zone, while increasing interest in European assets.
Marc Ostwald (ADM Investor Services):
“EUR/USD parity can rise to 1.22-1.23 zone. Germany’s loosening the debt brake policy is a growth-friendly step.”
“Mali Fear” wave in the USA
Increasing budget deficits and borrowing costs in Trump’s second period weaken the “US exceptionalism” narrative. This element, which once nurtured the powerful dollar narrative, is being replaced by Germany -based European narrative.
📉 Interest difference is no longer in favor of the dollar
US-Germany 2-year bond interest difference, euro/dollar parity no longer correlation. Because high US interest rates now reflect the need for debt financing rather than economic power.
The expectation that the ECB has completed interest rate cuts to a great extent, but the FED can reduce up to 125 basis points in the next 12-18 months leads to expanding the interest difference in favor of the euro.
🔄 Increased foreign exchange protection (FX Hedge) request
European funds, which invest in US stock markets, increase foreign exchange hedge rates to protect their portfolios due to the falling dollar. These hedge transactions are putting up the euro demand while suppressing the dollar.
Jordan Rochester (Mizuho):
“The hedge ratio, which was 61 %in January, rose to 74 %in April. 80 %have been reached before, so there is more way to go.”
🎯 Conclusion: Macro Stories Changing
Growth concerns and monetary policy uncertainty in the United States are gradually directing investors to Europe. Increased Hedge needs, potential Fed interest rate cuts and German -based growth policies show that the Euro may remain strong in the coming months.
