Primary Currency Risk Factor Analysis

Anna is a portfolio manager for a large institutional investor. She is currently assessing the impact of currency fluctuations on her investment portfolio, which includes significant exposure to European equities. Recently, the euro has experienced volatility due to varied macroeconomic factors, including interest rate differentials and geopolitical tensions. Anna is particularly concerned about how these factors may affect the valuation of her assets.

To mitigate potential currency risk, Anna is considering different strategies, including hedging through forwards and analyzing the correlation between the euro and the U.S. dollar. As Anna prepares her strategy, she revisits the key factors that can drive currency risk in her portfolio.

Which of the following options best describes a primary currency risk factor that Anna should consider in her analysis?