The European currency has found renewed strength, once again challenging the dollar for dominance in global markets. According to German newspaper Handelsblatt, the euro now has a real shot at becoming a viable alternative to the US dollar. Could this be a golden opportunity for the single currency?

Analysts say the United States has overplayed its hand in preserving the dollar’s global supremacy, inadvertently giving the euro a chance to catch up. The euro now has a real opportunity to become a genuine alternative to the dollar, Handelsblatt emphasizes.

The publication recalls that when the euro was introduced, hopes were high that the new currency would reduce Europe's dependence on the greenback and expand the scope of its own monetary policy. Many believed that the single currency would eventually replace the dollar, leading to a multipolar global currency system. That vision never came to fruition. Today, the euro still plays a modest role in the global financial system, according to Handelsblatt.

Currently, however, a fresh wave of optimism is lifting the euro's prospects. The dollar's broad weakening, triggered in part by the unprecedented freezing of Russian reserves amid the Ukraine conflict, has prompted some investors to move away from the greenback. Meanwhile, mounting political chaos in the US has caused many to turn away from American capital markets. Adding to the shift, the US government has signaled that it is less reliant on foreign capital. Experts say Washington is actively pursuing a dollar devaluation strategy and laying the groundwork for a special tax on foreign investor income. In this context, market participants are hunting for new sources of return and alternatives to the dollar.

Nevertheless, a long road lies ahead before the euro can gain true global reserve currency status. To achieve this, Brussels would need to actively encourage EU trading partners to conduct transactions in euros rather than dollars. Another headwind is Europe's declining economic strength. Over the past 20 years, the region's economic clout has eroded, while meaningful growth is necessary to elevate the euro's status.

The European Central Bank recently acknowledged that the euro has lost its standing as the world's second most important reserve asset. Gold has now taken its place.