FRANKFURT -- The euro is rising sharply against the US dollar, briefly trading above 1.20 since midnight on Tuesday to reach its strongest level since June 2021. The euro opened at 1.2039 against the US dollar on Wednesday morning, according to real-time global foreign exchange market quotations.

The rally built on earlier gains in the European session, when the euro was set at 1.1929 US dollars on Tuesday in the European Central Bank (ECB)'s reference rate, its highest fixing in more than four and a half years.

The euro strengthened further late Tuesday after the US dollar slid to a near four-year low, following remarks by US President Donald Trump that played down concerns about the currency's recent decline.

Trump said on Tuesday that the dollar's value was "great" when asked whether it had fallen too much, comments that traders interpreted as a signal to step up dollar selling, boosting the euro in turn.

The surge extends the euro's strong performance against the US dollar in 2025, when it rose by more than 14 percent.

The euro's appreciation has coincided with broader dollar weakness. The US dollar index, which measures the currency's value against a basket of other currencies, slid further in early 2026 as traders sold the greenback amid concerns over US economic policy, interest rate expectations and trade policy uncertainty.

ECB President Christine Lagarde last year called for a bigger international role for the euro as the US dollar weakened and signs emerged of investors diversifying away from US denominated assets.

Local analysts said the ECB's consistent monetary policy and spending programs launched by some European countries have also contributed to the euro's surge.