The political and commercial tensions generated by the policies of the American president have repercussions, not only on international trade, but also on currencies. The euro takes an unexpected place by becoming, on the financial markets, a potential safe haven.
The euro, a safe haven against a weakened dollar?
The European Central Bank (ECB), in its latest annual report, highlights “a one-off shift in market behavior during several recent episodes of financial stress”. Indeed, significant decisions by the Trump administration over the past year “have disrupted the traditional behavior of the dollar as a safe haven, allowing the euro to play this role during market tensions,” the ECB said this Tuesday, June 2, during the unveiling of its latest annual report on the internationalization of the single currency. This phenomenon, considered “unprecedented” by its intensity, would remain limited in time despite everything, according to the European institution. CChristine Lagarde, the President of the ECB, also indicated that “signs have shown that the euro behaved as a safe haven during several episodes of risk aversion in 2025 and early 2026”, in the introduction.
Customs duties, FED tensions
To explain this observation, the report takes up the impacts of the different positions taken across the Atlantic, such as the trade war launched by Donald Trump in April 2025, the institutional tensions around the American Federal Reserve, without forgetting the series of tariff threats at the start of 2026. For each scenario, the dollar has weakened against the main currenciesretreating into its historic status as a safe haven.
The dollar, dominant currency
The ECB points out, however, that this is a non-structural situation. The greenback maintains its dominant position, supported by the strength of the American financial markets and the strong consistency of assets denominated in dollars. As for the euro, it retains second place in the international monetary system. The report insists on this subject. HAS“The euro remains the second most used currency in the world for trade, debt issuance and foreign exchange reserves.”
The euro, figurehead of debt markets
For 2025, the euro’s share stands at around 20% in the main international indicators, up slightly over one year, but it remains lower than the levels of two decades ago. At the same time, investors have been diversifying their investments in recent months, as demonstrated by the prices of other safe haven values, notably gold and certain emerging currencies.
The dynamics of the debt markets, however, remain a point of support for the euro. International bond issues denominated in euros exceeded $1.1 trillion, their highest level ever, the report said. “Reverse Yankees” operations, which correspond to debt issues by American companies in euros then converted into dollars, have jumped 50%.
Financial assets emerge
The ECB depicts a financial landscape in reorganization, not to mention a structural shift. “The role of the euro in foreign exchange reserves falls slightly to 20.2%, while that of the dollar remains largely dominant at 57%,” details the report. A rise in alternative safe haven assets is emerging. “Central banks have increased their purchases of gold, while private investors have sharply increased their exposure to the precious metal, in a context of persistent geopolitical volatility.”
A fragmented landscape
Basic trends are already notable, says the ECB. Christine Lagarde also warns against “forces of fragmentation (which) are becoming more marked”, meaning that “the euro could lose importance: geopolitical tensions are boosting demand for gold, while alternative payments and cryptocurrencies, such as dollar-backed stablecoins, are gaining ground. HAS”
Thus, the fragmented landscape allows other currencies to impose themselves. The “Chinese renminbi now reaches around 9% of international market share, supported by the development of alternative payment systems”, analyzes the report.
Faced with these complex restructurings, the ECB does not foresee any immediate threat to the global monetary order. It highlights a certain resilience of the current system, “while highlighting the rise in competitive risks.” For her, the lasting rise of the euro is linked to reforms of the European financial architecture.« The euro has the opportunity to strengthen its global appeal, provided that European policymakers create the necessary conditions and put words into action »indicated Christine Lagarde in the report.
The euro, a “backup” safe haven
For the President of the ECB, the euro and its international strengthening will require “further integration of capital markets, better economic resilience and a more coherent institutional framework”. Faced with this recomposition, the euro could retain a place as an “additional” safe haven in an increasingly fragmented global financial system, with a weakened dollar in its role as an undeniable safe haven.
