Euro’s rise puts Draghi under pressure again

The rise in the euro exchange rate has put the onus on the ECB to maintain and perhaps increase monetary policy support. We doubt that the Bank will announce any policy changes following its meeting on 3rd September as it downplays risks surrounding China. But with the lower oil price and stronger currency adding to deflation risks, President Mario Draghi is likely to stress that further support is possible in future and perhaps outline how this could be provided. This should further reduce pressure on the euro.