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How will the ECB react to the euro’s rise?

The renewed rise in the euro since yesterday’s ECB press conference may increase speculation that the Bank will have to change tack. But we doubt that it will be too worried about the currency at current levels. A further appreciation might force it to taper very slowly or to strengthen its forward guidance. But we think it more likely that resumed policy tightening by the US Fed will put a lid on the euro.

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