Strong dollar hurts European stock market
Last Update: 25/12/2024
In recent weeks we are witnessing a new strengthening of the dollar against other currencies. This is also affecting the European stock market, whose correlation with the euro/dollar exchange rate is becoming increasingly positive.
The Eurozone is facing weak economic growth while the United States is showing greater economic resilience. These differences influence investor behavior, which tends to favor the dollar and safe assets in times of uncertainty, temporarily penalizing European equities.
Analyzing the correlation between the Euro/Dollar exchange rate and the performance of the Eurostoxx 600 index shows that from 2019 onward this has become increasingly positive. As the value of the Euro/Dollar exchange rate fell, so did the value of European equities.
The relationship can also be seen in terms of the performance of the Dollar Index versus the Stoxx 600.
