Can the Window Period of US Dollar Fluctuations Become a "New Opportunity" for the Euro? European Officials Call for Globalization of the Euro

The US dollar is currently in a period of volatility, and many European Central Bank (ECB) officials are calling for an opportunity to enhance the international status of the euro. For instance, Isabel Schnabel, a member of the ECB's Executive Board, believes that as investors turn to Europe, it is a favorable time to strengthen the global position of the euro.

So far this year, investors have been selling off the US dollar, and data shows that the dollar has also been depreciating against other major currencies.

At the 31st Dubrovnik Economic Conference held last Saturday (June 7), Schnabel stated that there is currently a certain opportunity to increase the international role of the euro. She added that there are signs that investors are looking to the European continent to diversify their portfolios, which she described as a "positive confidence effect."

Prior to this, European policymakers, including ECB President Christine Lagarde, have also indicated that officials are exploring ways to turn the US's attacks on global trade into an advantage for the eurozone.

It is worth mentioning that Wall Street investment bank Goldman Sachs has recently expressed optimism about the future trend of the euro. In a report, Goldman Sachs strategists wrote that the US non-farm payrolls data released last Friday aligns with the slowdown trend in the real economy and should weigh on the US dollar for some time. Strategists including Kamakshya Trivedi wrote in a June 6 report, "The depreciation of the US dollar may be entering a new phase, and we still believe this situation will continue."

Goldman Sachs has also raised its three-month forecast for the euro-dollar exchange rate to 1.17, its six-month forecast to 1.20, and its 12-month forecast to 1.25, citing the slowdown in US economic activity and a shift in global investors' interests. Previously, the institution's three-month forecast for this currency pair was 1.12, its six-month forecast was 1.15, and its 12-month forecast was 1.20.

Is the euro set for a "golden moment"?

Last Saturday, Schnabel also mentioned that talks with financial market participants showed that investors are increasingly interested in diversifying their investments and are turning their attention to Europe, "which is another piece of good news."

She also pointed out that another reason for the high profile of European markets is the expected increase in public spending on defense and infrastructure in Europe. "In the case of Germany, it has significant fiscal space, and investors are actually very positive to see that Germany has finally abandoned austerity policies."

Schnabel emphasized that more investment in Europe has eased financial conditions in the region, "which is another very positive impact."She also proposed the need for a large European bond market to strengthen the euro's global standing and suggested considering joint bond issuance to fund European public goods.

In recent weeks, numerous ECB officials have intensively voiced calls to accelerate the enhancement of the euro's international status.

At month-end May, President Lagarde stated that Trump's unpredictable policies presented a "golden opportunity" to bolster the euro's role, urging Europe to leverage this moment to claim more financial privileges currently exclusive to the dollar. She noted these shifts "open the door for a 'global euro moment'," emphasizing that politicians should seize this opportunity.

Spanish central bank governor Jose Luis Escriva also stressed during a June 8 interview, "The dollar's dominance as the international reserve currency appears to be peaking."

Escriva pointed out, "The euro has potential to rival the dollar, particularly if the eurozone maintains macro-economic and institutional stability. With a robust economy and trade volumes surpassing the US, Europe could strengthen the euro's role as a reserve and reference currency in international trade still dominated by the dollar."

Bundesbank President Joachim Nagel echoed similar views but cautioned against excessive erosion of dollar influence.

Nagel noted on Sunday, "From Europe's perspective, we need to strengthen the euro and make the continent more attractive to foreign investors. Of course, we must also closely monitor the dollar and hope it remains stable."