Americans traveling to Europe next year may be in store for some bargains.
That’s due to euro-U.S. dollar exchange rates. The euro has weakened against the U.S. dollar in recent weeks and is poised to fall further in 2025 and perhaps into 2026, economists said.
“That’s a good thing for American tourists traveling abroad in Europe,” said Brendan McKenna, an international economist at Wells Fargo Economics. Their purchasing power could rise “pretty significantly,” he said.
The euro has largely been stronger than the dollar for decades, making it pricier for travelers to buy goods and services denominated in euros.
But anticipated policies under President-elect Donald Trump’s incoming administration, such as tariffs, and other economic dynamics are expected to bolster the U.S. dollar and depreciate the euro, economists said.
Euro is expected to hit parity with the dollar
Economists expect the euro to fall to or even below parity with the U.S. dollar next year. That would mean the currencies had a 1:1 exchange rate.
The euro is used by 20 of the 27 nations in the European Union: Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
The currency most recently hit parity with the dollar in 2022, for the first time in two decades, before rebounding.
Now, euro parity is “back on the cards,” James Reilly, senior markets economist at Capital Economics, wrote in a research note Nov. 11.
“The euro has suffered more than most in the wake of Trump’s victory and we doubt that will let up anytime soon,” he wrote.
As of 10 a.m. ET on Friday morning, 1 euro equaled about $1.06. That’s down about 3% from roughly $1.09 as of market close on Election Day.
The ICE U.S. Dollar Index (DXY) was also recently on a winning streak, Reilly told CNBC. Last week marked the eighth straight week of gains in the index, an “extreme run” that had only happened three times since 2000, Reilly said.
Travelers can try to take advantage of these currency dynamics by delaying a purchase until next year. For example, a European hotel or tour that allows you to book now for 2025 but pay later lets you defer the expense — understanding, of course, that it’s not a guarantee the euro will continue to weaken against the dollar.
Tariffs, interest rates and a strong economy
Tariffs and trade policy are major factors influencing euro-USD currency dynamics, economists said.
Trump has floated broad tariffs on global trading partners.