Euro at Record High Against Trade-Weighted Currency Basket
The euro remains close to 10-year highs in real effective terms as the expectation of no further rate cuts by the European Central Bank (ECB), a stable US dollar, and China’s price competitiveness gains translate into a high real effective exchange rate, Fitch Ratings says in its latest FX Market Monitor.
In nominal effective terms, the euro was at an all-time high in September on the BIS effective exchange-rate measure. The euro has appreciated by about 13% against the dollar since the end of 2024, but Fitch analysts do not expect a further appreciation in 2026.
“We do expect the euro to appreciate by about 5% against the yen next year and by 1.4%-1.5% against the British pound and Chinese yuan.
“The euro’s sustained strength against its main trading partners may dampen further eurozone exporters’ prospects, while supporting real incomes through lower imported inflation”.
The US dollar has depreciated on average by more than 6% against developed market and emerging market currencies so far this year. It has weakened against all developed market currencies covered in the Fitch’s Global Economic Outlook.
The situation in emerging markets is more varied, with strong appreciations of the Russian ruble, the Brazilian real, the Polish zloty and the Mexican peso, offset by a weakening Turkish lira and, to a much lesser extent, Indian rupee and Indonesian rupiah.
FX forecasts in Fitch’s September 2025 Global Economic Outlook and Sovereign Data Comparator suggest that the dollar on the DXY index will be stable until year-end before depreciating moderately over the next two years. However, Fitch expects the DXY index to be 2.7% lower at the end of 2026 than forecast in July. Naira Appreciates to N1,444/$ as External Reserves Cross $43bn
