Euro to Hong Kong Dollar drops to a historic low: 3 key time points to interpret 20 years of exchange rate trends

The euro, the world’s second-largest reserve currency, has witnessed countless economic cycles since its official circulation began in 2002. Recently hitting a historic low, many investors in Taiwan, Hong Kong, and Macau are re-evaluating the investment value of EUR/HKD. This article traces key turning points over the past 20 years, analyzes why EUR/HKD has fallen from its peak to its trough, and offers insights into the investment outlook for the next five years.

From Historic Highs to Lows: Three Turning Points in 20 Years of EUR/HKD Exchange Rate

Looking back to understand the essence of the euro, we need to start with past market conditions. Let’s review the three most critical moments over the past two decades.

July 2008: Euro Reaches Historic High of 1.6038

In July 2008, EUR/USD hit a record high of 1.6038, then retreated. During this period, EUR/HKD was also in a high range.

This coincided with the peak of the US subprime mortgage crisis (also known as the financial tsunami). The crisis triggered a chain reaction in European financial systems:

Banking System Under Pressure — Major multinational banks suffered huge losses due to exposure to subprime-related assets, leading to significant asset devaluations. Although originating in the US, the global banking network caused risks to rapidly spread to Europe, undermining stability and dragging EUR/HKD lower.

Credit Markets Freezing — After Lehman Brothers’ collapse, market fears about counterparty risks dominated. Banks halted lending, making it difficult for businesses and consumers to access credit, stalling economic growth.

Economic Recession — Investment and consumption collapsed; many Eurozone countries entered recession, with rising unemployment. Investor confidence waned, prompting safe-haven flows back to the US dollar, exerting downward pressure on EUR/HKD.

Fiscal Crisis Emerges — Governments launched stimulus plans, leading to soaring budget deficits and public debt. These fiscal issues eventually evolved into the later European debt crisis.

Why Did EUR/HKD Rebound and Then Hit New Lows in the Last Decade?

January 2017: Opportunity After Near 9-Year Low of 1.034

In January 2017, after nearly nine years of decline, EUR/USD fell to a historic low of 1.034, then began to rebound. EUR/HKD also saw a chance to recover.

This turning point was driven by four main factors:

Monetary Policy Takes Effect — The European Central Bank (ECB) had long implemented negative interest rates and quantitative easing, providing ample liquidity and stabilizing the economy.

Economic Data Improves Significantly — Eurozone unemployment fell below 10% at the end of 2016; manufacturing PMI broke 55, signaling accelerating growth. These data boosted investor confidence in the eurozone outlook.

Political Environment Relatively Friendly — In 2017, the UK and EU began Brexit negotiations, with initial hopes for agreement. This optimism eased concerns about EU stability. Meanwhile, upcoming elections in France and Germany raised expectations for pro-European governments, further supporting the euro.

US Policy Uncertainty Rises — With Trump’s inauguration in January 2017, US policy unpredictability increased. Some capital flowed into perceived safe assets like the euro.

Euro Severely Oversold — Compared to the 2008 high, the euro had fallen over 35%. As the eurozone debt crisis eased and QE expectations waned, the euro was oversold, laying the groundwork for a rebound.

February 2018 to 2022: Rebound Stalls and New Lows

In February 2018, EUR/USD rose to 1.2556, the highest since May 2015. However, this peak marked a top. Over the next four years, EUR/HKD experienced a prolonged downtrend, ultimately reaching a 20-year low of 0.9536 in September 2022.

Key drivers of the decline included:

US Monetary Policy Shift — The Fed began rate hikes in March 2018, strengthening the dollar and exerting sustained pressure on EUR and HKD.

Eurozone Growth Slows — After a 3.1% GDP growth in Q4 2017, growth peaked and PMI indices declined from high levels, indicating weakening momentum.

Geopolitical Risks Rise — Political turmoil in Italy in 2018, and the Russia-Ukraine war in 2022, increased global risk aversion. Investors favored the dollar over the euro, pushing EUR/HKD lower.

Five Key Factors Driving EUR/HKD Movements

Energy Price Shocks

The Russia-Ukraine conflict disrupted Russian oil and gas supplies. Europe, as a major importer, saw energy prices soar to record highs in mid-2022. This fueled inflation, eroding consumer purchasing power and hampering economic growth.

As supply chains adjusted, energy prices eased in late 2022. Cost pressures diminished, recession fears subsided, and EUR/HKD rebounded from September lows.

ECB Shift Toward Tightening

In response to inflation, the ECB raised interest rates in July and September 2022, ending eight years of negative rates. This policy pivot supported the euro. Higher euro interest rates made euro assets more attractive, helping stabilize EUR/HKD.

Global Risk Sentiment

Early in the Ukraine conflict, risk aversion soared, with investors flocking to safe-haven currencies like USD and CHF. As the situation stabilized and the war did not escalate further, risk appetite improved, allowing the euro to rebound.

US Dollar Index Cycle

The Fed’s rate hikes since 2022 caused the dollar index to surge. Historically, each easing cycle (rate cuts) within 3-5 years tends to weaken the dollar significantly, which would be favorable for EUR/HKD.

Eurozone Fundamentals

Unemployment continues to decline, a positive sign. However, near-zero GDP growth, aging demographics, and persistent geopolitical risks remain challenges. In 2025, Eurozone manufacturing PMI briefly fell below 45, reflecting ongoing economic pessimism.

2026–2031: Investment Outlook for EUR/HKD

Economic Growth Uncertainty

Despite improvements, structural issues like near-zero growth, declining competitiveness, and aging populations persist. Geopolitical tensions are frequent and normalized, dampening investor confidence. These factors suggest limited upside for EUR/HKD in the medium term.

ECB Policy Space

Compared to the Fed’s aggressive easing, the ECB has been cautious. By late 2024, the US may begin rate cuts, weakening the dollar. The ECB remains cautious about ending rate hikes. If the Fed cuts rates significantly in 2026–2027, the dollar could weaken over 3–5 years, benefiting EUR/HKD. Higher euro interest rates may also sustain euro attractiveness.

Global Economic Recovery Expectations

Demand for European exports depends on global growth. If the world economy remains resilient, eurozone exports and the euro will appreciate. Conversely, a global recession would accelerate capital flows back to the US, pressuring EUR/HKD.

Investment conclusion: In early 2026, EUR/HKD may face downward pressure. However, if the US economy soft-lands and begins rate cuts, the euro could recover in the second half of 2026, especially before the ECB cuts rates aggressively. Conversely, new geopolitical crises could strengthen the dollar again, weakening EUR/HKD.

Four Investment Tools for Taiwanese Investors in EUR/HKD

Tool 1: Bank Forex Accounts

Open foreign exchange accounts at Taiwanese or international banks to buy and sell euros. Safe and reliable, but limited flexibility—mainly for long positions. Selling short or hedging may be difficult. Capital limits may apply.

Tool 2: International Forex Brokers (CFD Platforms)

Ideal for small investors and short-term traders. CFDs allow leverage and two-way trading—long or short EUR/HKD. Lower transaction costs and advanced technical analysis tools make this suitable for active traders.

Tool 3: Securities Firm Forex Services

Some Taiwanese securities firms offer forex trading. Combining bank safety with trading flexibility, suitable for investors familiar with the environment.

Tool 4: Futures Market

Trade EUR/HKD futures on exchanges. Futures offer standardized contracts, high liquidity, and transparent pricing. Suitable for experienced traders.

Seize Market Opportunities and Position for EUR/HKD

Overall, EUR/HKD from 2026 to 2031 will depend on three core variables: US monetary policy shifts, global growth momentum, and European geopolitical stability.

Short-term (first half of 2026): EUR/HKD may remain weak. But once the US begins rate cuts, the exchange rate could rebound, continuing until the ECB also cuts rates significantly.

Medium to long-term: If no major financial crises or geopolitical black swans occur, the outlook remains cautiously optimistic. Investors should closely monitor US and Eurozone economic data, central bank policies, and geopolitical news to adjust strategies timely.

Follow these three steps to start your euro investment journey:

1. Register — Fill in your information and submit your application
2. Deposit — Choose your preferred deposit method
3. Trade — Explore EUR/HKD trading opportunities and diversify flexibly

For investors in Taiwan, Hong Kong, and Macau, the current low levels of EUR/HKD present a valuable opportunity to reassess European assets. Combining fundamental analysis with technical confirmation can help you capitalize on future exchange rate fluctuations.