USD vs EUR: What’s Shaping the Currency Pair in 2025—and What Irish Exporters Need to Know
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According to a recent report, Ireland exported €224 billion of goods last year, an increase of €28 billion compared with 2023, with exports to the US alone up 34 per cent to a value of €72.6 billion.
Since President Trump returned to the White House, the US dollar has seen a resurgence in volatility against the euro—driven by a complex mix of economic policy shifts, central bank decisions, and geopolitical developments. For Irish exporters trading with the US, this movement in the EUR/USD currency pair has direct implications on margins, pricing, and cash flow predictability.
A Look Back: What’s Driven the US dollar Since 2024
The performance of the dollar versus the euro has been strongly influenced by the return of “America First” economic policies. Trump’s renewed focus on protectionism, tax reform, and deregulation has revived investor confidence in US domestic growth but also raised concerns about global trade stability. In response, the dollar strengthened sharply in the early months of his term before facing headwinds.
On the monetary policy front, the US Federal Reserve changed course in September 2024 when it cut the federal funds rate by 50 bps. The Fed then cut rates by 25 bps in each of the next 2 months.
Meanwhile, the European Central Bank (ECB) has taken an even more dovish stance, cutting interest rates (most recently in April for the 7th time in a year). The resulting interest rate divergence helped prop up the USD for most of 2024.
Add to that rising tensions in global hotspots—such as the South China Sea, continued instability in the Middle East, and a fractured NATO dynamic—and it’s no surprise currency markets have been reactive, with EUR/USD fluctuating within a wide range.
Since January 2025, the story has been one of dollar weakness as concern about the impact of tariffs has seen the dollar weaken by more than 10 per cent.
More recently, there was a reversal of this trend, as EUR/USD fell sharply to its lowest level in a month (below 1.11), with the US and China reaching an agreement on a 90-day pause, lowering tariff rates. Both sides said they would drop trade levies imposed since U.S. President Donald Trump’s April 2nd tariffs.
What to Watch for in the Second Half of 2025
Looking ahead, several key factors will likely influence the dollar–euro dynamic:
- US Federal Reserve: What will the next step be for the US Fed in terms of interest rates amid reducing inflation and as the impact of tariffs plays out?
- ECB Policy Moves: Will the ECB continue to cut interest rates as inflation comes under control?
- US Trade & Fiscal Policy: Any major policy shifts—such as tariffs on EU goods or aggressive tax cuts—could introduce both upside and downside pressure on the dollar.
- Geopolitical Stability: A major escalation in any global conflict or a breakdown in US-EU relations would inject fresh uncertainty and potential USD volatility.
How Irish Exporters Are Managing Currency Risk
For Irish exporters dealing in dollars, this kind of volatility creates real challenges. A strong dollar can improve euro-denominated returns, but sudden reversals can erode margins overnight. That’s why many companies are turning to currency risk management tools to bring predictability back into their finances.
Many exporters are working with payments and FX specialists like Fexco. Forward contracts remain the most common solution—allowing businesses to lock in exchange rates for future payments, shielding them from unfavourable moves. This allows businesses to assess exposure and time transfers more strategically.
Volatile exchange rates can erode your hard-earned profits in an instant — especially when trading in USD or EUR. As an Irish exporter, locking in your FX rate with a forward contract lets you plan with confidence and protect your margins from sudden currency swings.
How Fexco can help your business with these challenges
Killorglin based Fexco International Payments provides cost-effective, transparent, and secure foreign currency payment solutions so that businesses can enhance their financial resilience and maintain strong global trade relationships. Through its innovative payments platform and global banking network, Fexco enables companies to send funds in over 130 currencies to almost 200 countries worldwide, and removes the high costs associated with traditional banking cross-border payments.
To find out more about how Fexco can help you with your hedging requirements and offer a more seamless, efficient cross border payment experience, talk to John Barry today or visit https://internationalpayments.fexco.com/
John Barry
Payments & FX Consultant
Fexco International Payments
jobarry@fexco.com
Direct Dial: +353 (0)66 9799041
