Not everyone invests in the financial markets, but our lives and well-being are often influenced by what happens in them, especially regarding currencies. Maybe not always directly, but still.

For example, when a currency depreciates, imported goods become more expensive, increasing overall inflation. This, in turn, can lead to a reduction in real wages as a result of higher prices.

On the other hand, the ECB estimates that a 1% increase in the nominal effective exchange rate of the euro usually translates into an average fall of 0.51% in import prices across the euro area.

This suggests that it is essential to diversify your savings rather than putting all your money in one currency or investment. Bonds, in addition to fiat currencies, can be an interesting alternative.

In the United States, for example, the so-called Treasury Inflation-Protected Securities, known as TIPS, are issued to protect the investor's capital from depreciation in a highly inflationary environment.

As for corporate bonds, investment-grade bonds remain attractive because of their relatively high yields, low to moderate credit risk, and expectations that the Federal Reserve will cut interest rates.

What is the outlook for the two major currencies?

As always, opinions vary. Some believe the DXY could fall by around 30% in the next few years due to ongoing de-dollarization, high government debt, and falling interest rates.

On the flip side, some analysts, like those at Morgan Stanley, forecast a 7% drop in the euro and even a potential parity with the dollar, citing increasing political risks, economic weakness, and ECB policies.

As always, only time will reveal who is right. In the meantime, let's delve into other factors that could strengthen the dollar and weaken the euro beyond what has already been discussed.

For this scenario to take place, Trump would have to win the election and then, as he promised in his campaign, apply 100% tariffs to countries that do not use the dollar in trade.

At the same time, growing political uncertainty in Europe, particularly with the tensions in the French government and rising right-wing sentiments in Germany, could put further pressure on the euro.

The global financial crisis could also trigger a plummet in the EUR to USD rate, as was already the case in 2008. So far, however, economies seem to remain resilient, and there is no hard landing in sight.