The Euro weakened versus the majors following the release earlier today of the minutes of the European Central Bank’s 8th March policy meeting. Markets seem to have focused on the ECB’s statement that “developments in foreign exchange markets continued to be a significant source of uncertainty and a risk that needed monitoring”. We estimate that the Euro appreciated only 1% against a basket of currencies between the 25th January and 8th March policy meetings and so the ECB’s concern seems perhaps a little misplaced, particularly as it acknowledged that the Euro’s appreciation had not negatively impacted external demand.
The Euro has slightly recovered in the past few hours but the ECB is seemingly still intent on using verbal intervention to limit even modest Euro upside.
