In 2020, the euro reached its highest level as a result of the European Union policy of domestic stimulus to overcome the effects of the COVID-19 pandemic.

According to an online article, “the euro gained almost 10 percent vis-à-vis the U.S. dollar . . . different strategies to tackle the virus . . . have given a nice tailwind to the euro.” Briefly explain the potential impact on the European Union’s economy and possible policy reactions.