The European Central Bank convenes this week with a resurgent euro presenting a fresh dilemma, threatening to dampen inflation and undermine the export engine of the eurozone's largest economies just as recovery gains momentum.
As the European Central Bank prepares for its February meeting, policymakers are navigating a stronger euro driven by a weakening dollar and geopolitical uncertainty, while assessing the resilience of the eurozone economy.
President Trump's apparent endorsement of a weaker dollar is not mere rhetoric but a strategic pillar of his economic agenda, aimed at boosting US competitiveness and narrowing the trade deficit, with significant implications for global central banks and currency markets.
Germany's inflation rate ticked higher at the start of 2025, driven by rising food costs and persistent service price increases, even as energy prices provided some relief.
The Eurozone economy grew 0.3% in Q4 2025, matching the previous quarter's pace and easing earlier recession fears. However, analysts warn that the euro's sharp 14.4% gain against the dollar over the past year threatens to undermine the competitiveness of European exports.
