Currency shift: global investors rush to hedge dollar exposure — Financial Times

The euro is experiencing its biggest rally since 2017, with analysts predicting it could soon climb above $1.20. The surge is fueled by global investors rushing to hedge against the weakening dollar, driven by expectations of lower U.S. interest rates and renewed optimism about Eurozone growth. The ECB has already described this as a “global euro moment.”

Source Financial Times

Goldman Sachs forecasts the euro reaching $1.25 within 12 months, JPMorgan sees $1.22 by early next year, and UBS expects $1.23 by year-end. Analysts highlight that dollar weakness and growing hedging demand from pension funds and central banks are the main drivers behind the rally.

At the same time, European exporters are raising concerns: a stronger euro could hurt their profits by making European goods more expensive globally. This leaves the ECB facing a dilemma — whether to step in and restrain the currency’s rise to avoid further deflationary risks for the region.