Forex Flash: ECB Draghi's refusal to play Hollande's game to strengthen EUR/USD - Commerzbank

Recent euro strength has turned into a debate, initiated mainly by France, and is likely to become the centre of attention at today's ECB press conference. Commerzbank analysts don't see any excpectional move (15 cent in approx. 6 months), but Draghi should be forced to speak about the issue. “At today’s press conference ECB president Mario Draghi will probably only refer to the on-going improvement of the situation in the euro zone with reference to the debate surrounding the alleged euro strength”, wrote analyst Lutz Karpowitz, pointing also to the falling target balances interest rates on borrowings for companies in the different countries that have increasingly converged recently.

“The higher EUR-USD prices are therefore mainly a reflection of increased investor confidence, which Draghi is likely to welcome”, Karpowitz continued, adding that he will not be prepared to begin a debate about an active exchange rate policy, an absurd proposal. “Paradoxically the advocates of an exchange rate policy are also the ones who favored the
ECB emergency measures”, he wrote, suspecting Draghi's refusal to join in this game to even strengthen the EUR/USD today.