The euro continues to strengthen, reaching another peak against the US dollar. During recent trading, the single European currency rose by 0.5%, hitting $1.0548 – the highest level since December 10.
Reasons for the Euro's Rise
The main factor contributing to the euro's strengthening is the anticipated increase in defense spending in Europe. The European Union has announced a new military sector funding plan, which involves allocating €150 billion (approximately $158 billion) in loans to support the defense industry.
Experts associate the euro's growth with the fact that increased funding for the military sector may stimulate the region's economy, increase investment levels, and support GDP growth.
Long-term Strengthening Trend
Over the past month, the euro has shown a confident recovery, rising almost 4% after hitting a two-year low. The currency's growth is driven not only by internal economic factors but also by changes in the global investment climate – investors are paying attention to the strengthening European market and its prospects in the current geopolitical situation.
Analysts' Forecasts
Financial analysts expect that if defense spending continues to rise and economic support programs are adopted, the euro will continue to strengthen. However, its dynamics may also be influenced by external macroeconomic factors, including the monetary policy of the US Federal Reserve System and economic indicators in the eurozone countries.