EUR/USD → Euro-area stocks

Common explanation (Cause · opposite direction): A stronger euro erodes exporters’ price competitiveness and profits, which weighs on export stocks; but the broad market is driven by other factors too.

This issue: EUR/USD at 73 (warm), Euro-area stocks at 83 (hot) — both above normal, not in line with the common explanation (this is an inverse link).

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

EUR/USD: 2.4% above its 10-year average. Euro-area stocks: 50.1% above its 10-year average.

Tests

Does this link hold up?

Common explanationA stronger euro erodes exporters’ price competitiveness and profits, which weighs on export stocks; but the broad market is driven by other factors tooSource: European Central Bank, “Financial Stability Review, November 2025” (2025). The report covers exporters’ profits only, and also notes that euro area stocks kept rising while the euro strengthened in 2025.
Tested against our dataAgreement between the positions of EUR/USD and Euro-area stocks (3-month lag), measured in the direction of the common explanation: −0.74 (an opposite-direction link: the raw correlation is +0.74, and a negative correlation fits, so the sign is flipped). Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 0 of 3; data start only in 2018. Our data show the opposite
Periods when it did not holdAcross 3 5-year periods, out of step in 2018⁠–⁠2025.

History

The two lines, overlaid

Data: European Central Bank (ECB), euro foreign exchange reference rates; OECD Main Economic Indicators (share prices). Positions: our calculation.

EUR/USDEuro-area stocks

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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