The dollar's dominance is being tested

The article flags that the U.S. dollar — long the backbone of global trade — is being tested and asks whether this could be a turning point for the euro. It highlights the potential for shifts in FX reserve and invoicing patterns that could change currency flows and cross-border asset performance. Portfolio managers should monitor ECB vs. Fed policy divergence, rate differentials, and trade balance dynamics for signs of a durable euro move and review exposures in currency-sensitive exporters, importers and EM assets.

Analysis

The article flags that the U.S. dollar — long the backbone of global trade — is being tested and asks whether this could be a turning point for the euro. It highlights the potential for shifts in FX reserve and invoicing patterns that could change currency flows and cross-border asset performance. Portfolio managers should monitor ECB vs. Fed policy divergence, rate differentials, and trade balance dynamics for signs of a durable euro move and review exposures in currency-sensitive exporters, importers and EM assets.