Euro and TWD 20-Year Trend Overview: From Historical Peaks to Future Opportunities

As the world’s second-largest reserve currency, the euro has experienced numerous major economic cycles since its circulation began in 2002. From the 2008 financial tsunami triggered by the subprime mortgage crisis, the subsequent European debt crisis storm, to recent impacts of the Russia-Ukraine conflict and energy crisis, each event has left a profound mark on the euro-to-TWD exchange rate trend. This article will review twenty years of history, analyze key turning points in the euro exchange rate, and explore the potential profitability of investing in euros over the next five years.

Essential Knowledge for Euro-TWD Investment: Interpreting 20-Year Highs and Lows

The peak moment in 2008: EUR/USD reached 1.6038

In July 2008, the euro hit a historic high, with the EUR/USD exchange rate soaring to 1.6038. Behind this figure lurked the seeds of crisis—the collapse of the US subprime mortgage market was brewing.

When the subprime crisis fully erupted, the European financial system was hit hardest. Major banks suffered huge losses due to holding large amounts of US mortgage-related products. This credit risk rapidly spread from Wall Street to the City of London and major European financial centers. Banks tightened lending, companies and consumers faced financing difficulties, and economic activity noticeably contracted.

In response, governments launched large-scale stimulus measures, causing government bond yields to soar. Meanwhile, the European Central Bank continued to cut interest rates, releasing liquidity to support the markets. However, these policies increased downward pressure on the euro—when central banks flood the market with money, the currency naturally weakens. Even worse, shortly after the crisis, debt issues surfaced in eurozone countries like Greece and Ireland, leading markets to question the sustainability of the euro area, and a wave of euro asset sell-offs ensued.

The rebound after nearly 9 years of decline: EUR/USD bottomed at 1.034 in January 2017

In January 2017, after nearly 9 years of decline, the euro finally bottomed at 1.034 against the dollar. For Taiwanese investors, during this period, the euro-to-TWD exchange rate was also relatively low, making currency exchange more costly.

But this low point laid the foundation for a rebound. The eurozone debt crisis was gradually subsiding, and the European Central Bank’s easing policies began to take effect—although interest rates remained negative, large-scale bond purchases stabilized market expectations. Economic data also showed signs of recovery: eurozone unemployment fell below 10%, manufacturing PMI broke through 55, signaling accelerating growth.

Geopolitically, major elections in France, Germany, and other eurozone countries in 2017 boosted investor confidence with pro-EU parties winning. Brexit negotiations also eased early uncertainties. Coupled with policy uncertainties stemming from US President Trump’s administration, some capital sought safe havens, flowing into euro assets perceived as more stable. After a decline of over 35%, the euro was severely undervalued, and momentum for a rebound emerged.

The brief peak in 2018: EUR/USD reached 1.2556

In February 2018, the euro briefly rose to 1.2556 against the dollar, but this rally quickly reversed.

The US Federal Reserve began a rate hike cycle in 2018, strengthening the dollar index and exerting direct pressure on the euro. Simultaneously, eurozone economic momentum started to weaken; after a 3.1% growth in Q4 2017, it proved difficult to sustain, and manufacturing PMI retreated from high levels. Political changes in Italy—such as the coalition between the Five Star Movement and the Northern League—brought policy uncertainties that further dampened market confidence. These factors combined to push the euro lower from its high, initiating a new adjustment cycle.

Deep correction in September 2022: EUR/USD fell to 0.9536, a 20-year low

In September 2022, the euro dropped to 0.9536 against the dollar, hitting a 20-year low. During this period, the euro-to-TWD rate also weakened, reducing its attractiveness to Taiwanese investors.

This sharp decline had complex, multi-layered reasons. The Russia-Ukraine war heightened risk aversion, boosting the dollar. The energy crisis drove European inflation higher, raising recession fears. However, as the conflict stalemated, market concerns gradually eased, energy prices retreated from highs, creating opportunities for euro rebound.

A key turning point was the European Central Bank’s policy shift. In July and September 2022, the ECB raised interest rates consecutively, ending 8 years of negative rates. This move not only increased the appeal of euro assets but also signaled the ECB’s firm stance against inflation, providing strong support for the euro exchange rate. As energy supply chains gradually recovered and corporate operating pressures eased, the euro began to rebound from its lows.

Future Outlook for Euro-TWD Investment: Three Major Factors for the Next Five Years

Whether the euro can become a profitable investment tool in the next five years depends on developments in three key areas:

Economic Growth and Industrial Competitiveness

The eurozone’s economic growth rate is close to zero, with aging industries being a long-term challenge. Although unemployment has continued to decline recently, this low-growth environment limits euro appreciation potential. Geopolitical risks have become normalized, further suppressing international capital inflows. Recently, manufacturing PMI fell below 45, indicating a pessimistic outlook for the coming half-year. Investors should closely monitor eurozone GDP and unemployment trends to assess whether the economy can stabilize and recover.

Relative Advantages of Central Bank Policies

The US Federal Reserve shifted to a dovish stance at the end of 2023, hinting at an upcoming rate cut cycle. The ECB has been more cautious about maintaining relatively high interest rates, creating a policy divergence that may support the euro in the short term. Historical experience shows that after the start of US rate cuts, the dollar index often declines significantly within 3 to 5 years, which is favorable for the euro. If the ECB can make tangible progress in controlling inflation and adjust policies moderately, the euro could gain more upward momentum.

Global Economic Patterns and Trade Flows

Global economic conditions directly influence demand for eurozone goods and services. If international trade recovers and global growth accelerates, European exports will increase, pushing the euro higher. Conversely, if the global economy weakens and capital flows back to the US seeking safety, the euro will face depreciation pressure.

Currency Exchange and Investment Channels for Taiwanese Investors

Bank Foreign Exchange Transactions

Taiwanese commercial banks or international banks offer foreign exchange account services, allowing investors to buy and sell euros. The advantages are high security and regulated operations; disadvantages include possible capital restrictions and limited trading flexibility.

Forex Trading Platforms

International forex platforms provide more flexible channels for small and short-term investors, with leverage options suitable for experienced traders.

Securities Firms’ Forex Services

Some Taiwanese securities firms also offer forex trading services, enabling investors to trade euro-to-TWD through familiar platforms.

Futures Markets

Futures exchanges offer euro futures contracts, suitable for investors seeking higher leverage and hedging needs.

Outlook and Summary

Based on historical trends and current conditions, the euro may still face short-term pressure in the first half of 2024. However, if the US begins a rate cut cycle as expected and no major financial crises occur, the euro could regain upward momentum until the European Central Bank significantly loosens policies. Over the next five years, major geopolitical events remain the biggest variables—any event that heightens global risk aversion could boost the dollar and weaken the euro.

For Taiwanese investors, the medium-term outlook of euro-to-TWD depends on balancing these three factors. It is recommended to continuously monitor US and eurozone employment data, CPI trends, and central bank meeting minutes to catch early signs of exchange rate shifts. Only by thoroughly understanding macroeconomic dynamics can investors seize opportunities and avoid risks in euro investments.