15 April | Euro

Strong euro poses risks to eurozone economy — Reuters

Strong euro poses risks to eurozone economy — Reuters

The euro's continued strength is raising concerns about potential damage to the eurozone economy, particularly amid escalating global trade tensions and currency conflict risks. The appreciating single currency may undermine both the region's economic recovery and inflation targets. This dual threat presents fresh complications for the ECB, Reuters analysis suggests.

The ECB might cut interest rates beyond expectations, lowering its benchmark to 2.25% instead of the predicted 25 basis-point reduction. The central bank may also halt its balance sheet reduction program, mirroring the Federal Reserve's recent decision to pause quantitative tightening.

The eurozone faces multiple economic threats, including currency overvaluation, US tariff policies, and growing competition from Chinese imports. These challenges emerge as Germany readies new fiscal stimulus measures to bolster the region's economy.

With price stability as its priority, the ECB must act quickly. Reuters anticipates the central bank will deploy available policy tools to counter deflation risks.

Elena Berseneva MarketCheese
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