The rise in geopolitical tensions in the Middle East today acts as an exogenous shock to foreign exchange markets, simultaneously affecting the movements of international reference currencies and those of emerging economies.
At the heart of this dynamic, key exchange-rate indicators show that currency movements are no longer mere seasonal fluctuations but measurable quantitative responses to a more uncertain global environment. Analyzing ratios and exchange-rate data provides a more precise reading of these mechanisms.
A stronger dollar against its peers
On the side of major currencies, the U.S. Dollar Index (DXY) remains a key barometer, reflecting the value of the U.S. dollar against a weighted basket of currencies (with nearly 57.6% for the euro, 13.6% for the yen, etc.). An uptick in this index signals increased demand for the greenback, often seen as a safe-haven asset particularly during geopolitical escalations.
In international markets in 2025, the euro has experienced episodes of significant weakness against the dollar, falling to levels near parity (1.0226 dollars per 1 euro at the start of 2025), i.e., a depreciation of about 9% from its late-2024 peak. This development illustrates growth divergences between the American and European economies and the impact of energy pressures on the euro area.
This dynamic also reverberates in the world’s major foreign exchange reserves: although the dollar’s share has slightly declined over ten years to around 58% of international reserves, it remains by far the leading reserve currency, ahead of the euro which hovers around 19%. At the same time, gold has gained attractiveness, representing nearly 20% of global reserves in 2024.
