Strength in trade-weighted Euro undermines ECB's reflation efforts

The broad measure of the nominal effective or trade-weighted euro exchange rate undermines the European Central Bank's fight against deflation, according to Robin Brooks, Chief Economist at the Institute of International Finance (IIF). 

At levels above 121.00, the trade-weighted measure is hovering near its strongest level ever.  "Only time when the broad, trade-weighted Euro was stronger was in the immediate aftermath of the GFC, and it set in motion a long weakening cycle," Brooks tweeted on Monday while taking note of the strength in the trade-weighted exchange rate and its impact of inflation. 

The EUR/USD pair is currently trading near 1.1855.