The European currency showed little reaction yesterday to a speech by European Central Bank President Christine Lagarde, who stated that the unpredictable policies of President Donald Trump present an excellent opportunity to strengthen the euro's international role.

Speaking in Berlin, the ECB representative noted that if national governments can address the long-standing issues holding back the European Union's economic potential, they may be rewarded with lower borrowing costs as well as protection from exchange rate fluctuations and sanctions. This statement, delivered in the heart of Europe, was not just a diplomatic courtesy but a clear message: the region's future economic prosperity depends on governments' willingness to implement overdue reforms. The ECB is effectively offering a kind of deal—structural reforms in exchange for more favorable financial conditions and protection from external shocks.

What specific problems is the ECB referring to? A set of interrelated issues: inefficient bureaucracy, insufficient labor market flexibility, uneven economic development across member states, and low investment in innovation and infrastructure. Solving these issues requires a comprehensive approach and strong political will.

"Ongoing changes are creating the conditions for a global 'euro moment,'" Lagarde said on Monday. "This is a unique opportunity for Europe to take control of its destiny. But it's not a privilege that will simply be granted to us. We must earn it."

Her comments highlight how regional policymakers are trying to turn Trump's attacks on global trade and U.S. institutions to their advantage. It's worth noting that investor support for the EU's ambitions has already yielded some results: since the imposition of tariffs, many market participants have sold the dollar, leading to a solid strengthening of the euro—something Lagarde previously called "contrary to common sense," but nonetheless justified.

In her Monday speech, Lagarde also recalled past instances when U.S. actions may have undermined the dollar's role as the leading reserve currency, including Richard Nixon's decision to suspend the gold standard in the 1970s. "While there was no reliable alternative back then, today there is the euro—another international currency alongside the dollar," Lagarde said.

In its latest report on the matter, the ECB noted that the euro's international role remained generally stable in 2023. Lagarde identified three key areas essential for enhancing its global standing:

1. A strong and reliable geopolitical foundation, maintaining firm commitment to open trade and backing it with security capabilities.
2. Completion of the single market, support for startups, regulatory simplification, and the creation of a savings and investment union. She also reiterated the need for greater joint financing at the European level for measures such as defense—a politically sensitive issue.
3. Demonstrating the EU's ability to maintain a solid legal and institutional framework that preserves investor confidence in its long-term value.

EUR/USD Technical Outlook

Currently, buyers need to focus on capturing the 1.1375 level. Only then will a test of 1.1416 become viable. From there, the pair could aim for 1.1450, though reaching it without support from large players will be quite difficult. The furthest upside target would be the 1.1490 high. In the event of a decline, I expect significant buying activity only around the 1.1335 level. If no buyers emerge there, it would be preferable to wait for a retest of the 1.1300 low, or consider long positions from 1.1259.

GBP/USD Technical Outlook

Pound buyers need to reclaim the nearest resistance at 1.3590. Only then can they aim for 1.3620, above which it will be quite difficult to break through. The furthest target lies in the 1.3640 level. If the pair falls, the bears will likely try to seize control of 1.3545. If they succeed, breaking through this range would deal a serious blow to the bulls' positions and push GBP/USD down to the 1.3510 low, with the prospect of extending the decline to 1.3475.