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    Lagarde to speak at ECB conference on financial fragility and future crises

    by VT Markets
    /
    Sep 17, 2025

    Focus on Financial Fragility

    We will discuss what might happen during the “next financial crisis.” However, we don’t expect any major policy announcements from Lagarde during her speech. The main point of ECB President Lagarde’s welcome address will focus on financial fragility and the next crisis. This highlights what policymakers are thinking about. This emphasis on stability is crucial, especially since Eurozone inflation (HICP) for August 2025 remains high at 2.8%, above the targeted level. With recent data showing a slight decline in manufacturing for the third month, the ECB faces a tough choice: control inflation or avoid a hard landing. Traders should watch shifts in forward rate agreements, which might begin to reflect a more lenient approach than previously thought.

    Market Volatility and Euro Impact

    Market volatility seems too low, considering the central bank’s concerns. The V2X index, which tracks volatility for the Euro Stoxx 50, is hovering around a low 14. Looking back to 2025, we notice that periods of low volatility, like in 2017, can end suddenly. This may be a good time to buy protective puts on major indices. A more cautious ECB could also negatively affect the Euro, especially against the US dollar. We should monitor options markets for signs of increased demand for EUR downside protection. Additionally, watch credit default swap indexes like iTraxx Europe; if they widen, it may indicate growing concerns about systemic risk. Create your live VT Markets account and start trading now.

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