Why the Euro Is Falling as European Stocks Rally

European stocks are posting solid gains in late May 2026, with the VGK ETF up 1.5% over five days, yet the euro is sliding against the dollar — dropping from $1.17 to $1.16 in the same period. In this episode, Lucas and Luna unpack the seeming paradox. They trace the divergence to the Iran war's impact on European energy costs, the ECB's reluctance to hike into a fragile recovery, and a surprising capital flow: European investors piling into US dollar assets as a safe haven. Lucas walks through new data showing eurozone real GDP growth just ticked up to 2%, but the trade-weighted dollar index hit 119.3, the highest in years. They also discuss how southern European bonds — once considered risky — are now behaving like core assets, and what that means for the currency. A tightly argued 10 minutes on why a stock rally and a weaker currency can coexist, and why it matters for anyone holding euros or European equities. #Euro #ECB #EuropeanStocks #DollarStrength #IranWar #EnergyCosts #EurozoneGDP #TradeWeightedDollar #VGK #EZU #SafeHavenFlows #SouthernEuropeanBonds #CurrencyDivergence #Inflation #FexingoBusiness #BusinessPodcast #Economics #ContinentalMarkets Keep every episode free: buymeacoffee.com/fexingo