From the end of the first quarter, the euro recorded a spectacular rebound against its great American rival. This surge in the single currency is all the more unexpected as it comes at a time when the euro zone seems to be struggling to recover from the shock caused by the Coronavirus crisis.

In three months, the euro erased all of the decline it had suffered against the dollar over the past two years. However, this nice performance deserves to be put into perspective. On closer inspection, we can see that the 7.3% increase in the euro/dollar parity observed since the end of March is actually more the result of the weakness of the dollar than the return to grace of the European currency.

tags. The euro star Because the dollar has indeed depreciated against most major currencies over the past quarter. It lost 1.25% against the yen, 3.7% against the yuan and 5.93% against the pound sterling, which is undermined by the prospect of a hard Brexit. Nevertheless, the euro has indeed risen in recent times. On average, it rose by about 3% against the currencies of countries with which the euro area has trade relations. This is, at the same time, little and a lot for an area already quite shaken by the economic shock it has just experienced.

tags. Revival of credibility However paradoxical it may be, the rebound of the euro does not lack foundations. Among these foundations, the agreement on a €750 billion recovery plan negotiated between European countries during the summer probably proved decisive. In addition to the positive impact it will have for the area economically, this plan has indeed demonstrated that Europe is emerging, at least institutionally, strengthened from the crisis.

The resulting revival of the Union's credibility has not only forced those who bet on its dislocation to cut their positions, but it has also reassured the undecided who were reluctant to invest in the Old Continent, from which the European currency has benefited the greatest.

Add to this that, at 1.20 against the dollar, the euro is around its historical average. It is also approaching its estimated intrinsic value of between $1.20 and $1.30. Measured by this yardstick, the euro would have only corrected its undervaluation. A correction that nevertheless comes at the worst time and singularly complicates the task of the Central Bank.

tags. Collateral effects The eurozone would have done well without the enthusiasm shown by its currency, a craze that has at least two major disadvantages. It hinders the competitiveness of our economy by causing the price of our exports to rise. Conversely, it reduces the cost of our imports and thus maintains the deflationary pressures from which it suffers.

For the European Central Bank, which has never managed to rekindle the flame of inflation despite the unprecedented measures it has put in place to achieve this, the blow is rather harsh. It is therefore understandable that she came out of her reserve to announce that she was concerned about the situation. But it would probably take more than words for the euro to return to a level that is more in line with the interests of the Union. .