Donald Trump’s victory in the United States (U.S.) presidential election has triggered significant turbulence in global financial markets, with the euro experiencing the most visible impact. Over the past nine days, the euro has seen a sharp decline in value.
Since Trump’s win, the euro has been losing ground against the U.S. dollar and is now nearing parity, with its value almost equal to that of the dollar. Such a decline has not been recorded since November 2022, when the eurozone faced major inflationary challenges.
On November 5th, one euro was worth 1.09 dollars, but the very next day, its value dropped to 1.07 dollars. Although a slight rebound was observed on November 7th, the euro continued its downward trend, and its current value is around 1.05 dollars. If this negative trend persists, analysts predict the euro could again fall below one dollar, resembling the situation in November 2022.
The primary driver of the euro’s decline is the fear of potential new trade barriers, given Trump’s announcements of imposing tariffs on goods from the European Union (EU). This uncertainty has triggered a wave of euro sales in international markets, further reducing its value against the dollar.
However, the euro is not the only currency to lose value following Trump’s victory. Other global currencies, such as the Canadian dollar, South Korean won, Japanese yen, and Mexican peso, have also declined against the U.S. dollar.
Interestingly, this is not the first time the euro has faced such a drop during Trump’s political ascent. A similar scenario unfolded after Trump’s 2016 presidential victory, which also caused a significant decrease in the euro’s value, along with other currencies. That decline was attributed to trade threats, shifts in foreign trade policy, and general market uncertainty.
If the current trend continues, markets could face additional economic challenges, particularly in eurozone countries, which may come under renewed pressure due to the decreasing value of their currency. Given the interconnectedness of global financial markets, the market reaction to Trump’s victory could have far-reaching consequences, not only for the euro but for other global economic factors as well.
