Is the euro emerging as the next strongest safe haven?

The euro is proving to be a stable safe haven in volatile markets, second only to gold, according to analysts who used a statistical approach to rank assets by their ability to protect multi-asset portfolios.

“Gold stands out as the strongest safe haven.”

HSBC said the euro’s defensive qualities are now statistically on par with the traditionally defensive Swiss franc.

“Although the euro’s advantage over the Swiss franc is marginal, this is clear statistical evidence that it can improve performance in multi-asset portfolios,” the analysts said.

The study comes at a time of high uncertainty. “Markets have had to deal with sharp policy shifts and reversals so far in 2025,” HSBC noted, with shifting correlations making it difficult to rely on conventional safe-haven assets such as developed market interest rates.

“Developed market interest rates – once a trusted safe haven – have struggled to provide clear evidence as an effective hedge for equities,” the bank said.

The firm evaluated various allocation scenarios and found that emerging market interest rates had the best return/risk profile in unconstrained portfolios.

But once realistic equity allocations of 40–60% were included, gold and then the euro were said to have ranked highest. HSBC’s methodology involved calculating expected returns in-house and running millions of simulations.

“Determining the expected return from stand-alone investments is much more important than making any shifting assumptions about correlations,” the firm said.

Overall, the euro’s resilience in mixed-asset portfolios underscores its growing role in times of stress, HSBC concluded.