Will the ECB respond to the rising euro? Analyst weighs in World Economy News 03/02/2026 The euro’s recent rise has put the European Central Bank back in focus, but economists say the move is unlikely to trigger any immediate response from policymakers. The euro climbed to $1.20 against the U.S. dollar last week for the first time since mid-2021, a move that has been unusually rapid by historical standards. Over a 10-day period, the currency has strengthened by that magnitude only a handful of times in the past decade, while its trade-weighted exchange rate has reached an all-time high, according to data cited by Capital Economics. Despite the pace of the appreciation, the impact on inflation in the euro zone is expected to be limited. Capital Economics said sensitivity analysis published alongside the ECB’s forecasts suggests that if the euro were to settle at its current level against the dollar, headline inflation would be about 0.1 percentage points lower next year than projected in the ECB’s December forecasts. That shift slightly tilts risks to inflation to the downside but falls well short of what would be needed to justify foreign exchange market intervention on price stability grounds, the brokerage said. The ECB is expected to discuss the currency’s strength at its meeting next week, but direct action appears unlikely. The central bank has the ability to intervene in foreign exchange markets to prevent disorderly conditions that could threaten price stability, yet Capital Economics said the euro would have to rise much further before such steps would be considered. Even then, intervention by buying dollars is seen as very unlikely. Historically, the ECB has intervened in currency markets only twice, in late 2000 and in March 2011, and both times to support a stronger euro. Those actions were coordinated with other major central banks. Capital Economics noted that coordinated efforts to push the euro lower now appear extremely unlikely, given the U.S. administration’s stated preference for a weaker dollar. ECB officials have so far downplayed the recent move. Vice President Luis de Guindos has previously said that levels above $1.20 would be “complicated,” while also describing $1.20 as “perfectly acceptable.” Austria’s central bank governor was quoted as calling the latest rise against the dollar “modest.” Capital Economics said ECB President Christine Lagarde may reiterate that policymakers are monitoring the euro closely but is unlikely to take steps to talk it down. While intervention looks improbable for now, sustained gains could still influence monetary policy over time. Capital Economics said ECB analysis indicates that if the euro were to rise gradually to between $1.25 and $1.30 over the next three years, headline inflation would be about 0.3 percentage points lower in 2028. In that scenario, policymakers would be more likely to rely on stronger verbal intervention and lower interest rates rather than currency market operations. For the moment, economists say the euro’s strength reflects dollar weakness more than underlying euro zone momentum, limiting the urgency for a response. As a result, the ECB is expected to stay on the sidelines unless the currency’s appreciation becomes significantly larger and more persistent, according to Capital Economics. Source: Investing.com 2026-02-03 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0]