The European currency has been feeling quite confident lately — something that can be partly attributed to the wait-and-see stance adopted by representatives of the European Central Bank (ECB).

Boris Vujcic, a member of the ECB's Governing Council, recently reiterated his view that the current policy stance is at an appropriate level. He added that the ECB has done its job by bringing inflation down to the target without triggering a recession.

Vujcic's statement came amid growing concerns about the sustainability of economic growth in the eurozone. Despite progress in curbing inflation, many analysts warn against premature complacency, pointing to persistent risks linked to geopolitical instability and the energy crisis. In particular, experts note that the decline in inflation has been driven mainly by falling energy prices, while core inflation — which excludes volatile components — remains relatively high. This means that price pressures could return in the event of a renewed energy crisis or a sharp increase in consumer demand.

Moreover, the ECB's tight monetary policy has negatively affected investment activity and economic growth. It has also led to higher borrowing costs for businesses and households, which in turn has slowed the economy. Now, with inflation nearing the target level, the ECB still faces the difficult task of balancing efforts to contain core prices with the need to support economic growth.

The Croatian official's remarks, made at an event in Miami, came a week after the ECB left borrowing rates unchanged for the third consecutive meeting, being satisfied that the current monetary policy parameters are keeping prices under control without putting undue pressure on the economy.

Given that inflation is close to the 2% target and that GDP in the third quarter exceeded expectations, economists do not anticipate any imminent changes to the deposit rate, which has been reduced eight times during this cycle — from 4% to 2%.

It is clear that only the final policy meeting of the year in December will provide a better sense of the likely inflation trajectory, as the ECB updates its quarterly forecasts. However, some officials within the ECB remain concerned that the new projections may signal a deviation from the expected figures over the next three years.

Vujcic also pointed to risks facing the European economy — among them concerns about fiscal discipline among eurozone governments and signs of asset overvaluation in financial markets.

As for the current EUR/USD technical outlook, buyers now need to capture the 1.1570 level. Only then will they be able to aim for a test of 1.1590. From there, it may be possible to climb toward 1.1610, though doing so without support from major players could prove quite difficult. The most distant target would be the 1.1636 high. In case the pair declines, I expect strong buying activity only around the 1.1545 level. If there are no major buyers there, it would be wise to wait for a renewal of the 1.1520 low or to consider opening long positions from 1.1490.

As for the GBP/USD technical outlook, pound buyers need to take control of the nearest resistance at 1.3150. Only this would allow them to aim for 1.3180, above which a breakout would be rather difficult. The most distant target would be the 1.3215 level. In case of a decline, bears will attempt to regain control at 1.3135. If they succeed, a break below that range would deal a serious blow to the bulls' positions and push GBP/USD down to the 1.3095 low, with the potential to reach 1.3056.