ECB's Lagarde: Trade deals haven't eliminated uncertainty

In her speech at the World Economic Forum, Christine Lagarde emphasized that the global economy is currently facing major challenges, but despite trade tensions and high uncertainty, economic growth has remained relatively stable. In the first quarter of 2025, growth was stronger than forecast due to the effect of "frontloading," i.e., accelerated imports prior to the introduction of tariffs, which also supported the eurozone economy. Private consumption and investment also had a positive impact on the European market, and the labor market situation remained stable, with unemployment at 6.2%. At the same time, Lagarde noted that growth in Europe slowed in the second quarter as the tariffs introduced began to negatively affect exports. She also pointed out that although the new EU-US trade agreement reduces the risk of the worst-case scenario of tariff increases, uncertainty remains, highlighting the need for further diversification of European trade and deepening ties with other economic partners.

Lagarde noted that further economic slowdown is expected in the third quarter as the earlier effects of accelerated imports gradually fade away. She also emphasized that the September projections will be crucial for assessing the impact of the new trade agreement with the US on the euro area economy and will form the basis for future monetary policy decisions.

The EURUSD pair is losing slightly in value today. On the broad currency market, the British pound is performing relatively well, while we are seeing increased declines in the New Zealand dollar. Below is the current volatility heat map for individual currency pairs.