Skip to main content

Market Overview

ECB Could Be Feeling The Pressure Of A Strong Euro

ECB Could Be Feeling The Pressure Of A Strong Euro

The European Central Bank may be feeling the pressure to ease further at Thursday’s policy meeting as the euro catapulted towards $1.40 this week on stronger than expected data and the expectation that the bank isn’t planning to make a move.

The common currency traded steadily at $1.3910 at 5:45 GMT on Thursday morning after coming within a half-cent of $1.40 on Wednesday.

Although the ECB has repeatedly insisted that the exchange rate is not a policy aim, bank President Mario Draghi admitted last week that the bank would be forced to take the common currency’s strength into account if it continued to rise.

The currency’s rising value is seen as a negative for the region as it has the potential to weigh on prices and makes the region’s exports less competitive.

See also: The Futility Of Attempting To Predict The Markets

Inflation remains a concern for the bank as the bloc’s inflation figures have been dangerously low in recent months, causing many to worry about the possibility of deflation. Though most don’t expect the eurozone’s consumer prices to slip below zero, April’s 0.7 percent reading was still far below the ECB’s target of two percent.

However, April’s inflation data was a modest improvement from March’s 0.5 percent which many believe will allow the bank to wait until June to implement a quantitative easing program.

Bloomberg reported that most analysts are not expecting to see the central bank make a policy move at Thursday’s meeting, saying that the currency’s strength is not enough to prompt urgent action.

Many believe that Draghi’s comments last week were designed to put pressure on the currency rather than to shed light on the bank’s plans.


Related Articles (EWI + BROAD)

View Comments and Join the Discussion!

Posted-In: European Central BankNews Eurozone Forex Global Federal Reserve Pre-Market Outlook Markets Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at