Since the end of 2017 the euro has overtaken the dollar and as of now has pushed it near three-year lows. While investors might be happy about a strong euro, this is not such great news to the European Central Bank because a strong currency is not that great for inflation. The ECB’s impressive stimulus measures have aimed to increase inflation, but now the central bank has to deal with the threat of a strong euro.
Today the ECB is meeting to discuss its further monetary policy. Economic data from all around the euro zone continues to be overwhelmingly positive, boding well for inflation, but the strengthening of the euro means the ECB would not be looking to increase interest rates anytime soon. Doing that could swing the economy the other way and undo all the good work the stimulus measures have achieved since the financial crisis.
It is likely that ECB Governor Mario Draghi will express concern for the euro in his speech in an attempt to call investors down and stop the rapid growth of the euro.
