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    ING reports that ECB concerns rise over the euro’s strength impacting inflation targets and EUR/USD gains

    by VT Markets
    /
    Jan 28, 2026
    The EUR/USD pair is showing strong upward movement as short-term EUR swap rates decrease. This raises concerns for the European Central Bank (ECB) about meeting its inflation targets. The euro’s strength is a challenge for policymakers, and if it stays above 1.1910/20, the EUR/USD could rise to 1.23 or 1.24. As the pair remains above 1.1910/20, bullish momentum is strong. Recent data suggest there could be further gains ahead. However, a stronger euro may pose risks to the ECB’s policy and could lead to missing inflation goals.

    Euro Momentum and ECB Challenges

    This week, EUR/USD has gained bullish momentum, nearing the 1.1500 mark. This is creating issues for the ECB, as it may push inflation below their target. The latest inflation data for December 2025 has dropped to 2.3%, heightening concerns as the February meeting approaches. The fact that EUR/USD hasn’t dipped below the 1.1380 support level keeps the bullish trend alive. For derivative traders, this suggests they might buy call options or call spreads to take advantage of potential gains, as it could indicate a ‘breakaway gap’ situation. A similar pattern occurred in the third quarter of 2025, just before the rally paused near 1.12. One major concern for the ECB is the rising euro. Those more cautious (doves) within the ECB may worry that this stronger currency might lead to falling inflation. As a result, traders should think about using options as a safeguard against any sudden changes in stance from ECB officials.

    Policy Uncertainty and Trader Strategies

    This scenario is reminiscent of the challenges in 2024 when the rapidly rising euro led the ECB to take a softer approach. If the euro rises to 1.1600 or higher, it could undermine their efforts, especially since Q4 2025 GDP growth has slowed to just 0.1%. This slowdown could force the ECB to act, creating volatility that can be managed with options. Create your live VT Markets account and start trading now.

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