European Central Bank Vice President Luis de Guindos said late Sunday that US President Donald Trump’s policies are causing more uncertainty for the economy than there was during COVID, per Bloomberg.
Key quotes
We need to consider the uncertainty of the current environment, which is even higher than it was during the pandemic.
What we’re seeing is that the new US administration isn’t very open to continuing with multilateralism, which is about cooperation across jurisdictions and finding common solutions for common problems. This is a very important change, and a big source of uncertainty.
Market reaction
At the time of press, the EUR/USD pair was up 0.05% on the day at 1.0883.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold breaks through $3,450, fresh record highs
Gold price continues to build on its record rally, hitting another all-time high above $3,450 in Asian trading on Tuesday. Investors continue to flock to safety in the traditional store of value, the Gold price, amidst heightened risks of a US recession and financial market instability.
AUD/USD holds steady above 0.6400 amid a tepid US Dollar bounce
AUD/USD consolidates above 0.6400 in the Asian session on Tuesday. The US Dollar attempts a tepid bounce amid the uncertainty over Trump's trade policies and the weakening confidence in the US economy. Concerns about the rapidly escalating US-China trade war act as a headwind for the Aussie.
USD/JPY mires in multi-month low near 140.50
USD/JPY stays defensive near 140.50 in the Asian session on Tuesday, consolidating Monday's downfall to seven-month lows. Trade war concerns, global recession fears, hopes for a US-Japan trade deal, and the divergent BoJ-Fed bets could continue to underpin the Japanese Yen despite a broad US Dollar rebound.
ARK Invest integrates Canada's 3iQ Solana Staking ETF into its crypto funds
Asset manager ARK Invest announced on Monday that it added exposure for Solana staking to its ARK Next Generation Internet exchange-traded fund and ARK Fintech Innovation ETF through an investment in Canada's 3iQ Solana Staking ETF.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.