Euro and EBC Policy Change: Will Currency Appreciation Determine the Bank's Decision?

2026-02-14 23:01:47

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Recent movements of the European currency have attracted the interest of both investors and monetary policy decision-makers. According to analysts from ING, the recent strengthening of the euro above the 1.20 level against the US dollar should not prompt the President of the European Central Bank, Christine Lagarde, to modify her stance on exchange rates.

Consistent ECB Stance on Currency Fluctuations

Lagarde has repeatedly emphasized that the European Central Bank does not target specific exchange rates. However, the institution closely monitors euro movements due to their direct impact on inflation levels in the eurozone. This approach forms the foundation of the central bank’s monetary policy.

The recent decline of the currency below the 1.20 threshold has eased concerns among some policymakers. A weaker euro has lessened its significance as a factor that could hinder achieving inflation targets. However, the situation could change if the currency strengthens again significantly.

Underestimated Risks in Financial Markets

According to ING’s analysis, market participants may be underestimating the scenario in which the European Central Bank expresses concern over the euro’s renewed strength. If the central bank decides to emphasize its dissatisfaction with the euro’s strength, it could lead to a decline in its value and increased volatility in currency markets.

The ECB’s decision at Thursday’s meeting will serve as an indicator for market observers regarding whether the central bank is truly concerned about the current euro level and whether it will change its rhetoric on this matter.

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