Since the announcement of an agreement for a historic European stimulus package at the end of July, the single currency has been back in favor with international investors.
The European recovery plan and the rise of the single currency
It took four days and nights of negotiations, and all the willpower of the Merkel-Macron duo: the 27 members of the European Union have finally reached agreement on a 750 billion euro recovery plan. "A major and essential step has been taken. This is a historic change for our Europe and our eurozone", declared Emmanuel Macron at the end of the talks.
Of the 750 billion euros, 390 billion will take the form of grants, an idea initially opposed by Austria, Finland, the Netherlands and Sweden. The remainder will be allocated in the form of traditional loans, which each country will have to repay.
As soon as this recovery plan was announced, and even before an agreement had been reached, the euro began its ascent, attracting investors who were given a united image of Europe.
The European Central Bank's emergency program, a boon for investors
However, the European stimulus plan is not the only reason for the euro's surge, which reached $1.16 on July 22, a level it hadn't seen since September 2018.
Indeed, the announcement by the European Central Bank (ECB) at the end of May of an emergency program enabling it topurchase 750 billion euros in assets had given the single currency the initial impetus to begin its recovery, even though it had fallen to 1.06 dollars.
"Extraordinary circumstances call for extraordinary action. There is no limit to our commitment to the euro. We are determined to use the full potential of our tools, within the framework of our mandate", declared ECB President Christine Lagarde at the time.
According to some experts, the euro's rise over the coming months will depend above all on the respective economic growth of Europe and the United States. If Europe outperforms, an influx of capital can be expected, and the euro could rise as high as $1.20.