European travel in the upcoming summer season anticipated to incur high costs
In the ever-evolving world of international finance, the Canadian dollar has experienced a notable shift in its exchange rate with the euro. This change, referred to as a currency recalibration, has resulted in a notable appreciation of the euro against the Canadian dollar.
The EUR/CAD exchange rate has increased by approximately 7.7% over the year, with the highest rate observed around 1.6109 CAD per euro in early July 2025. This strengthening euro relative to the Canadian dollar is part of a broader shift in the international currency landscape.
European policy actions aimed at strengthening the euro's global role are driving this trend. The European Union's consideration of making carry-on baggage fees free on all flights, for instance, is just one of many initiatives designed to boost the euro's attractiveness.
More significantly, the European Central Bank's initiatives, such as issuing EU-level bonds and advancing a digital euro, are enhancing the euro’s liquidity and attractiveness. These moves are contributing to the euro’s appreciation versus some other currencies, such as the US dollar and the British pound.
While the euro's position against the US dollar is strengthening, the euro tends to benefit from EU-level financial policy integration, potentially making it more attractive in certain contexts compared to the UK's independent monetary policy post-Brexit.
The weakening of the U.S. dollar is causing major foreign investors to rebalance their portfolios to reduce their exposure to the U.S. market and better protect against dollar risks. Simultaneously, the depreciation of the American dollar is primarily due to the economic and trade policy of President Donald Trump.
However, the chief economist of Desjardins does not foresee a major shift in the dominance of the greenback. The expert believes it's not proven that the euro can replace the dollar, especially due to political fragmentation within the eurozone.
Paradoxically, the American dollar has depreciated against the Canadian dollar, with one American dollar now costing about 1.37 Canadian dollars, a saving of nearly 5%. The size of the Canadian market is much smaller compared to the European market, which may contribute to this shift.
In summary, the currency recalibration is bolstering the euro's value against the Canadian dollar, but the chief economist of Desjardins considers the euro's rise a temporary blip. As the world continues to navigate geopolitical tensions and trade policy shifts, it will be interesting to see how these trends evolve.
In light of the European Central Bank's initiatives and the European Union's financial policies, such as the potential elimination of carry-on baggage fees, the euro's attractiveness for travel and lifestyle purposes is potentially increasing. Simultaneously, the strengthening euro relative to the Canadian dollar could influence government finance, specifically when dealing with international transactions or trade with Canada.
