European Central Bank policymakers warned this afternoon of the risks attached to currency movements after the euro hit new highs against the dollar.
ECB President Jean-Claude Trichet said "brutal" currency movements could hurt growth.
"Sharp currency movements are not in favour of global growth, and I don't welcome brutal moves. This is what I have said, I don't withdraw any of it," he told reporters in Frankfurt.
The European Commission gave the same message. "The recent and ongoing sharp exchange rate movements are unwelcome," a spokesman for Economic and Monetary Affairs Commissioner Joaquin Almunia said.
However, markets don't seem to be listening, and analysts are wondering whether, and at what point, the ECB and the Federal Reserve will intervene directly on markets to try to stem the euro's rise.
Most analysts expect the ECB to keep its key interest rate at 4 per cent through 2008, despite an inflation rate which hit 2.6 per cent in October, well above the bank's 2 per cent reference ceiling, and is seen staying above 2 per cent for much of next year.
The euro fell back after Bank of Spain Governor Miguel Angel Fernandez Ordonez said the slowdown of the euro zone economy in the wake of the US mortgage debt crisis was likely to be worse than originally thought.