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To be honest, the competition in the predominance of currency is self-evident amid headwinds for the US dollar. Multiple negative factors including concerns over the US deficit, flip-flopping tariff policy as well as the threats to the independence of the Fed is dampening the sentiment around the greenback. Meanwhile, the euro is striving to strengthen its global importance in full potential.
So far in 2025, broad uncertainty even shock around US tariff negotiations and their impact on the economy and inflation, along with the expectations of a fiscal boost in the EU, have driven roughly 14% increase in the euro against the dollar.
The global proportion of the euro in foreign exchange reserves has held roughly steady for more than a decade, at around 20%. The U.S. dollar’s share slipped from 68.8% in full-year 2014 to 57.8% by the end of 2024. And reckless, flip-flopping policy from Washington has further fueled a notable selloff in greenback, which saw its steepest losses of this year in April. So far the U.S. dollar accounts for 48.46% of global payments, followed by the euro at 23.56%, according to Swift.
It seems that the dollar assets are facing inflection point，while market is re-assessing the structural attractiveness of the dollar as world's global reserve currency and is undergoing a process of rapid de-dollarization. The fear alone is enough to move the market, and the EU is step efforts to take advantage of the opportunity to strengthen its global importance in full potential.
The U.S. dollar still remains by far global predominant currency, and he status of the dollar will not change over night, but the trend of de-dollarization will continue , which will further push the euro’s global importance this year while political forces fuel further gains against the U.S. dollar for the foreseeable future, that will make the euro be in a position to gain in international reserves.
The euro may be a long way off threatening the greenback as the top global reserve asset, but the currency will increasingly be seen as a stable alternative as long as it has supportive policymaking behind it, including the EU must create a Banking Union and Capital Markets Union and reduce internal barriers to allow the euro to increase its role in international markets to strengthen its position.
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