ING analysts said the ECB’s expansion of the EUREP facility supports the euro’s global role and could affect EUR/USD. They tied this to stronger demand for euro assets in reserves and more use of the euro in trade invoices. They said there is growing debate about whether the ECB’s push for a stronger international euro means it would accept a stronger euro. They added that the ECB would focus on how a higher trade-weighted euro affects its inflation outlook, and whether lower inflation could lead to rate cuts. They said talk of rate cuts would be more likely if EUR/USD moved closer to 1.25. They also said today’s geopolitical environment has increased the focus on building a bigger global role for the euro. They said the French government wants an extra economic review of whether promoting euro use could lift EUR/USD and hurt French exporters. ING’s base forecast puts EUR/USD at 1.22 at year-end, with upside risks. The article was created with help from an Artificial Intelligence tool and reviewed by an editor. Looking back at the 2025 analysis, the view that the European Central Bank would accept a stronger euro has proven right, with EUR/USD staying firm. The call for 1.22 by the end of last year was met. Since the start of the new year, the pair has stayed near 1.22–1.23. This steady trading suggests the ECB is putting more weight on strengthening the euro’s global role. This support is now clearer in the data. SWIFT figures for January 2026 showed the euro’s share of global payments rose to its highest level in three years. A survey of central bank reserve managers also pointed to a continued, modest shift into euro-denominated assets in Q4 2025. This suggests demand is not only speculative, but also driven by large, long-term investors. ECB officials have not done much to push back against this trend, even though eurozone inflation is still below the 2% target at 1.8% in January. There have been no major official warnings about the exchange rate. That supports the view that the ECB would only become concerned if EUR/USD got close to 1.25. This quiet stance suggests the easier path for EUR/USD is still higher. For derivatives traders, this backdrop can make buying medium-term EUR/USD call options with strikes near 1.24 appealing. This gives exposure to a possible move toward 1.25 in the months ahead while limiting downside risk. Implied volatility is still fairly low, as markets have adjusted to the ECB’s calm approach, which may make these options better value. Another approach is to sell out-of-the-money put spreads with a lower strike near 1.21. This strategy can profit from either a slow move higher or continued range trading by collecting premium, based on the view that the ECB’s stance creates support under the euro. Export-focused countries still raise concerns at times, but so far those concerns have not been enough to break the broader trend.

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