Last updated: December 8th, 2025
On the surface, the euro looks unstoppable. Against the Australian dollar, the trend has been clear – and uncomfortable for AUD holders.
As of early December 2025, €100 costs roughly $176 AUD, putting the exchange rate near €0.56, down from around €0.60 earlier in the year.
To the casual observer, that looks like a simple, familiar story.
The Aussie dollar is weakening against another major currency – again.
Tip: Zoom out for better historical context of AUD/EUR performance.
And with talk of a European economic recovery circulating for 2026, many forecasts predict the slide is far from over.
But exchange rates don’t tell the full story.
Slower, deeper forces beneath the surface are shaping AUD/EUR’s future.
First, growth is compounding faster in Australia, creating a tailwind for AUD relative to EUR:
- Eurozone: Real GDP tracking at just ~1.0% growth, with Germany (the bloc’s engine) flirting with zero growth amid industrial contraction and energy-cost pressures.
- Australia: Consensus forecasts nearer 2.0–2.5%, supported by population growth (net migration ~350,000+ annually) and commodity export expansion.
Second, the public debt risk picture looks more ominous in Europe:
- Eurozone average public debt: ~90% of GDP, with Italy and Greece exceeding 140–150%.
- Australia: Net government debt under 45% of GDP, with longer-duration bonds locked at lower refinancing rates.
When you examine those forces, the euro’s future looks far less safe than the numbers suggest.
Here’s what almost nobody is talking about in the AUD vs EUR outlook for 2026.
2025 Was Brutal For AUD vs EUR – Here’s Why.
The reversal of the so-called ‘Trump trade’ played havoc, causing the AUD’s value to slip substantially.
Soft economic data out of the US – combined with President Trump’s announcement in March of 2025 of tariffs to be imposed on Canada, China and Mexico – saw investor sentiment switch.
US stock markets dipped, and the euro suddenly became a lot more attractive to forex traders.
Important!
The AUD’s value also suffered due to fears over the fallout for Australia if a US-China trade war were to erupt, and further subdue Chinese growth.
Trade tensions and market volatility escalated further in April, with new, large tariffs threats, including against the European Union.
But amidst stock market tumbles and trade negotiations, the EUR continued its strength against the greenback.
(Largely due to a lack of confidence in the American currency).
In July, Governor of the Bank of Finland, Olli Rehn, described the rebalancing of exchange rates as a “historic opportunity to elevate the euro into a trusted global anchor.”
On the other hand, traders dumped the Aussie.
‘Liberation Day’ tariff turmoil saw the AUD drop to below US$0.60, and plummet to just €0.54.
A five-year low.
While the Aussie has rebounded somewhat since then, it’s still down against the euro.
Did You Know?
While the European Union includes 27 countries, the euro (€) is the single currency across 20 member countries. The collective of countries where the euro is used is known as the Eurozone.
What Experts Are Warning About AUD vs EUR.
The AUD to euro forecast from NAB sees the currency pair reaching €0.59 by June 2026.
| AUD/EUR | Jun 2026 | Sep 2026 | Dec 2026 |
|---|---|---|---|
| 0.59 | 0.59 | 0.58 |
Above: By June 2026, NAB thinks AUD/EUR will be €0.59.
An outlook from OFX published on 12th November predicted the AUD/EUR pair would trade within a range of €0.5587 – €0.5698 over the month.
Its analysts said markets could favour the euro in the coming months if signs of improvement in the German manufacturing sector continue into 2026.
Important!
The Eurozone PMI data for November showed that business activity expanded again, after solid growth in October. Germany’s PMI slowed down slightly, falling from 53.9 to 52.1.
A continuation of the US Federal Reserve’s interest rate-cutting cycle into 2026 is also expected to weaken the US dollar.
Whereas the European Central Bank (ECB) looks set to hold or potentially start lifting its policy rates in 2026.
(Related: 7 Best Crypto Exchanges In Australia).
In addition to a more dovish Fed, the US economy doesn’t stack up as well against Europe’s fiscal agenda in coming years, according to Mahjabeen Zaman, ANZ’s head of FX research.
Of course, the rate differential with the US should also help boost the Aussie against the greenback – but it’s less likely to benefit the AUD against the EUR.
Important!
The US Federal Reserve has made two 25bp worth of cuts in the second half of 2025, but a cooling jobs market combined with rising inflation has the Fed divided over its next move.
ING FX analysts are bullish on the EUR/USD rising to €1.20 by mid-2026 , but it depends heavily on the Fed’s next moves:
The strength of the euro area economy will also be a deciding factor.
- Its economic outlook is strengthening, but still weak, with growth projected to be around 1.2% in 2026.
- Annual inflation was at 2.1% in October 2025, which was a decrease from 2.2% in September.
- Its debt-to-GDP ratio is increasing, from 88% in 2024 to 91% in 2027, due to deficits and servicing costs.
The European Commission’s forecast from 17th November suggests investment will increase significantly in 2026, mainly driven by equipment purchases spurred by fiscal stimulus.
Important!
The European Union has the third-largest economy in the world behind the US and China, dominated by the GDP output of Germany, France and Italy – which all use the euro. Growth is forecast to rebound in Germany in 2026 to 1.2% thanks to a ramp-up in public spending.
What Is The Impact Of Monetary Policy On The AUD/EUR?
Although inflation in the eurozone isn’t quite within target – at 2.1% compared to its 2% goal – 93% of economists polled by Reuters in November think the ECB will keep rates on hold throughout 2026.
But more policy easing is likely in the US.
Did You Know?
Markets are pricing in another quarter point cut when the Federal Reserve next meets in December. Goldman Sachs predicts another two 0.25% cuts in the first half of 2026, to bring the US policy rate to 3.0%-3.25%.
Even with the differential in the US’ favour, its easing agenda and shaky economic conditions, compared to a stabilising euro area, could lend weight to appreciation of the euro.
But demand for the AUD against the euro could improve given the Reserve Bank of Australia (RBA) looks to be shifting back into hawkish territory.
NAB’s chief economist Sally Auld said on 26th November that the Reserve Bank of Australia was grappling with whether the current rate of 3.6% was restrictive, neutral, or actually supporting demand – given that inflation is back above-target.
Retail spending is also rising.
The Commbank Household Spending Insights Index rose by 0.6% in October 2025 after a similar lift in September.
A widening of the interest rate differential between Australia and the eurozone could bolster the AUD/EUR cross pair.
Will The AUD Get Stronger In 2026?
The AUD/EUR pair’s exchange rate is heavily influenced by how both currencies perform relative to the US dollar – a safe haven currency for investors.
A major headwind for the Australian dollar in 2026 is slowing demand for our commodities, in large part due to China’s property sector downturn and slump in consumer demand.
Important!
Westpac’s Luci Ellis said in October that recent Chinese Government stimulus wouldn’t deliver lasting upside for Australian iron ore exports, largely because Chinese steel production has peaked.
Another risk comes from US-China trade relations.
Tensions ratcheted up again as President Trump met with President Xi in October, with Xi determined to push back on tariffs against China.
However, a deal was reached.
And Westpac’s Elliot Clarke said the Chinese economy was “well insulated from the US threats”.
He argues the key downside risk is household demand, which China’s latest 5-Year plan does aim to boost.
Important!
UBS investment bank forecasts China’s GDP growth to decline to 4.5% in 2026 but suggested: “Uncertainties related to US trade & tech policies and China’s policy response may lead to risks to our baseline forecast. ”
Historical Performance Of The AUD/EUR.
The euro took a beating in 2022, depreciating against the US dollar in one of its worst-performing years. At one point, it lost 16% of its value against the greenback.
In July 2022, the euro lost parity with the US dollar for the first time in 20 years — it’s historically been worth more than the dollar.
(Related: AUD to GBP: Expert Forecast).
Russia’s invasion of Ukraine naturally affected economies across the Eurozone due to supply chain disruptions, increased energy costs and increased fear and doubt among consumers.
Not coincidentally, it was the euro area’s worst year of inflation – reaching 10.6% in October 2022.
But the AUD to euro pairing declined again, then moved into a period of stability.
- The AUD to Euro exchange rate averaged €0.613 in 2023.
- It was around €0.609 in 2024, making one euro worth AU$1.64.
Final Verdict On AUD To Euro Outlook.
Forecasts are for the AUD/EUR to lift slightly to sit in the range of €0.58- €0.59 in 2026 – meaning one euro is worth around $1.69 Australian dollars.
A widening interest rate differential between Australian and European central banks could increase demand for the Aussie relative to the euro, but the impact may be minimal.
The AUD/EUR exchange rate also rests largely on the policies, growth prospects and political tensions that emerge out of the US, Europe and China.
Jody
Nelson says:
I attempted to use the “hack” to dodge conversion fees, but sadly after converting AUD to USD on a Wise account, there doesn’t seem to be a way to deposit that money into eToro; i.e. eToro recently disabled Wire transfers and Wise doesn’t support SWIFT transfers for sending USD to a bank in the US?
John Keys says:
CMC Invest are an abysmal in turning around new accounts.
Over 1 month to setup up an account with an investment trust, and still waiting. I was promised 5 business days.
Reg Watson says:
Given that China’s economy is going down the toilet how the heck do we expect an appreciation of the Aussie in 2024 ? We are tied to China.
Regular citizen says:
Unless you can see into the future or time travel, try to refrain from predicting a stronger AUD. It’s now Dec 2025 and contrary to all you top earning ‘economists ‘, the AUD ain’t shit.