ECB’s Lagarde credits Trump’s erratic policies for euro’s surge over US dollar

Christine Lagarde, the president of the European Central Bank, said that the recent climb of the euro over the US dollar came from what she called Donald Trump’s erratic decisions.

According to La Tribune Dimanche, Lagarde told the paper on Saturday that instead of the dollar gaining ground during global uncertainty like it usually does, the euro is the one going up.

“It’s impressive to note that in a period of uncertainty when we should normally have seen the dollar appreciate significantly, the opposite happened: the euro appreciated against the dollar,” she said. Her explanation: people in the markets no longer trust how Trump is running things.

Lagarde called the moment “counterintuitive” but not surprising. She said the dollar is falling because of what she described as confusion and loss of confidence caused by the president’s actions.

In her words, “uncertainty is permanent and renewed daily” in the United States, and that is pushing investors toward Europe. She also said this isn’t a problem for Europe — “more than a threat, it is an opportunity.”

She told the paper that now is the time for European Union leaders to move faster and finish what she called the job of integration.

Lagarde calls for deeper EU integration to capitalize on currency change

Lagarde explained that Europe is being seen as more reliable right now. She said the region offers a “stable economic and political area,” with a strong currency and a central bank that isn’t under any political pressure.

She warned that the US can no longer claim that same kind of independence. She didn’t mention any names in that part, but she was clearly pointing at Trump’s frequent outbursts at the Federal Reserve. Lagarde warned that a central bank being controlled by politicians never ends well.

“The independence of the central bank is fundamental to monetary and financial hygiene within a country or group of countries,” she said. “In every case where a central bank has found itself under the thumb of a fiscal authority, it has never ended well.”

Lagarde also pushed for more reforms within Europe. She mentioned the digital euro and the single capital market as areas where momentum is building fast. “There is a groundswell more powerful than anything I’ve seen in six years in office,” she said.

Lagarde added that the same type of united oversight already in place in Europe’s banking system should be expanded across sectors. The numbers back up what she said.

ECB officials stress caution on rates, warn of inflation uncertainty

The dollar has dropped this year against every major currency tracked by Bloomberg, including the euro. That’s not a coincidence. Investors are leaving the greenback behind as Trump continues to throw out unpredictable trade moves and threatens the independence of the Fed.

His actions have created what Lagarde sees as a clear opening for Europe to step up. Luis de Guindos, her vice president, also commented recently, saying that the euro could become a real alternative to the dollar as a reserve currency.

But like Lagarde, he said that would only happen if the EU does more to unify. Isabel Schnabel, an executive board member, made similar remarks the same weekend. “We now have a historic opportunity to further strengthen the international role of the euro,” she said. She called for quick action while the global trust in the euro is at a high point.

She also addressed the rising value of the euro directly, saying that it should be read as a show of faith in Europe’s economy. “We now have a historic opportunity,” she repeated, almost echoing her earlier remarks word for word.

But she also added one big condition — Europe needs a stronger bond market. She said a massive capital pool is necessary if the euro is going to play a bigger role on the world stage.

That also means opening up the conversation on joint debt again, she said. “I do think that it’s not fundamentally wrong to also think about joint debt to finance public goods in Europe,” Schnabel told the podcast. That debate has come and gone before, but with the euro rising and the dollar sliding, European officials now see the moment as too big to waste.