The euro has been depreciating against the dollar since the third quarter of 2021. But why is this happening? In the opinion of economists at Natixis, it can be attributed both to the yield spread between the United States and the eurozone and to the low attractiveness of the euro-zone equity market.

Is the euro depreciating against the dollar, or is the dollar appreciating?

“In terms of the exchange rate against the dollar, the euro has depreciated less than the yen, more than the renminbi, and as much as emerging currencies other than China and the pound sterling. It is, therefore, the dollar that is appreciating, and the euro is not depreciating against the dollar any more than other currencies.”

“The recent weakening of the euro is linked to: A decline in non-residents' purchases of European bonds; Since the start of 2022, a decline in non-residents' purchases of euro-zone equities; And not other possible capital flows (resident capital, short-term capital flows).”