Euro Supported as Top Dollar Alternative Amid Strong Portfolio Inflows

Euro Strengthens on Robust Portfolio Reallocations, Reinforcing Its Status as Key Dollar Alternative

The euro continues to enjoy strong support as the most liquid and reliable alternative to the US dollar, driven largely by significant portfolio reallocations, according to a recent analysis by ING’s senior analyst Chris Turner. This trend is underscored by the latest eurozone balance of payments data, which revealed that eurozone residents repatriated an impressive €40 billion in foreign equity holdings in March. This represents the largest inflow of capital since September 2022, signaling renewed investor confidence in the euro area.

Turner emphasizes that this influx of funds into the eurozone’s equity portfolios contributes to what he describes as a “pretty healthy” outlook for the euro at present. This strong portfolio inflow is reinforcing the euro’s position amid ongoing global economic uncertainties and currency market volatility.

The euro responded positively to these developments, gaining 0.5% against the US dollar to reach $1.1339. ING anticipates that the euro will continue to trade within a range of $1.1280 to $1.1380 throughout Friday, reflecting a stable yet bullish outlook for the currency.

Overall, the euro’s recent strength highlights its growing appeal to investors seeking a liquid and stable alternative to the US dollar, especially as concerns about fiscal and geopolitical risks linger in global markets. This dynamic suggests the euro may maintain its upward momentum as portfolio reallocations persist in favor of the currency.