With the strengthening of the U.S. dollar, here are Europe's top gainers and decliners.

• This week, the U.S. dollar strengthened, causing Europe's major currencies to reach multi-year lows against it.
• The euro and British pound are expected to weaken further due to uncertain economic conditions and the possibility of new U.S. tariffs under the incoming Trump administration.
• Other currencies in the region could rise in value, analysts told CNBC.

The strengthening of the greenback could benefit and harm Europe, analysts predict, with market observers anticipating the weakening of the bloc's major currencies in 2025 due to President-elect Donald Trump's inauguration in the U.S. and ongoing economic uncertainty.

On Monday, the U.S. dollar index reached its highest level in over two years, due to a hotter-than-expected jobs report from the United States last week.

On Tuesday at 6:29 a.m. London time, the dollar index had decreased by 0.3% to 109.59. The previous day, it reached its highest price since November 2022, trading at 110.

The greenback rose, causing European currencies to hit multi-year lows. The euro fell 0.4% to $1.0199 by 12:50 p.m. London time on Monday, its lowest value against the dollar since August 2022. It remained unchanged on Tuesday morning.

The pound, which had been under pressure due to rising government borrowing costs and concerns about the UK economy, fell 0.8% to $1.2125 on Monday, its lowest level since early 2023. On Tuesday at 7:00 a.m. London time, the pound remained relatively stable.

As President-elect Donald Trump takes office again, the U.S. dollar is expected to remain high, while European currencies struggle to regain momentum, predicts Bartosz Sawicki, market analyst at Conotoxia.

The likelihood of markets exhibiting similar behavior to what was observed during Donald Trump's first presidency, characterized by sudden, erratic fluctuations but without any clear trends, suggests that the U.S. dollar will maintain its strength in the near future, according to the expert.

Sawicki predicts that the dollar may trend lower in the long term, particularly if expectations of big rate cuts from the Federal Reserve fail to materialize. However, he notes that this doesn't necessarily mean good news for Europe's currencies.

According to the expert, the upcoming quarters will be challenging for both the euro and sterling as they may not be able to attract investors and capital inflows due to the impact of trade wars and uncertainty.

"The euro and British pound were trading at $1.05 and $1.25, respectively, at the end of the year. As a result, there was no relief for the European currencies."

Winners and losers

On Monday, George Saravelos, the global head of FX research at Deutsche Bank, expressed his bearish outlook on both the euro and sterling in a note to clients.

Deutsche Bank's team forecasts the euro's range for this year as between $0.95 and $1.05, with the possibility of new tariffs from Trump being a factor that could affect the currency's value.

"The British pound is facing risks of more cuts from the Bank of England due to weakening data flow, according to Saravelos. The external flow picture is weak, with rising energy prices and a persistently weak portfolio flow and FDI picture. Hot money carry-driven FX inflows that supported sterling last year are at risk of turning."

For one European currency, however, Saravelos had a positive outlook.

"In Switzerland, we are optimistic about the franc, according to a note from Monday. Although we anticipate further easing from the Swiss National Bank (SNB), we believe that the zero lower bound will soon be reached, which will slow down the pace of easing compared to other countries."

The U.S. accused Switzerland of deliberately devaluing its currency against the dollar in 2020, an allegation the country's officials rejected.

According to Saravelos, it is unlikely that the SNB will aggressively push back on franc strength, which will allow it to outperform.

According to Alex King, a former FX trader and founder of Generation Money, the increasing worth of the dollar has consequences for various European economies.

Fresh price rises could pose a challenge for the U.K., according to him.

"The strength of the U.S. dollar makes energy imports more expensive for the U.K., which is a net energy importer, including imports of U.S. LNG and oil. This could lead to an increase in inflation in the coming months, exacerbating existing inflation concerns due to potential U.S. tariffs."

The U.K. economy could face a precarious position, according to King, as the Bank of England has limited options to reduce inflation due to rising government borrowing costs, stubborn inflation, and increasing wage expenses.

The U.K. has a trade surplus with the U.S., which could benefit U.K. exporters by making their products cheaper for U.S. importers.

Recently, Germany has become a major importer of U.S. LNG, and a weaker euro could increase energy costs, particularly affecting the manufacturing sector.

Any additional rise in energy costs could cause significant damage to many German manufacturers who have already been grappling with higher energy expenses, according to him.

A strong dollar could benefit Norway as a potential winner in Europe, according to King.

On Tuesday at 7:20 a.m. London time, the Norwegian krone experienced a 0.2% increase in value.

"As a small European country, Norway will benefit from a stronger U.S. dollar due to its major oil exports. This will increase its income, and its sovereign wealth fund, which is heavily invested in dollar-denominated assets, will also see an increase in value."