The path of drastic tightening of interest rates currently set by investors in the Eurozone is difficult to implement, which will further increase the pressure on the euro. ECB President Christine Lagarde has just stated that the ECB will take “moderate countermeasures” in response to the inflationary impact brought about by the Iran conflict. Her statement was in line with those of other officials. Officials sent a signal that they were willing to raise interest rates to a mildly restrictive range. The ECB itself estimates that the upper limit of the nominal neutral interest rate is 2.50%, so the mildly restrictive interest rate level is around 2.75%. However, the current pricing of the overnight index swap market will also raise interest rates about three times, and interest rates will eventually reach 3.25%. Looking at current oil prices and inflation indicators, this scenario is a tail risk. Once this interest rate pricing is falsified, the euro's decline will further intensify. On the eve of next year's French presidential election, the euro is already weakening.

The path of drastic tightening of interest rates currently set by investors in the Eurozone is difficult to implement, which will further increase the pressure on the euro. ECB President Christine Lagarde has just stated that the ECB will take “moderate countermeasures” in response to the inflationary impact brought about by the Iran conflict. Her statement was in line with those of other officials. Officials sent a signal that they were willing to raise interest rates to a mildly restrictive range. The ECB itself estimates that the upper limit of the nominal neutral interest rate is 2.50%, so the mildly restrictive interest rate level is around 2.75%. However, the current pricing of the overnight index swap market will also raise interest rates about three times, and interest rates will eventually reach 3.25%. Looking at current oil prices and inflation indicators, this scenario is a tail risk. Once this interest rate pricing is falsified, the euro's decline will further intensify. On the eve of next year's French presidential election, the euro is already weakening.