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How much is too much of a good thing? The euro has strengthened 5 percent versus the dollar this year — a fair reflection of the European Union’s better handling of the COVID-19 crisis, not least its historic decision to create a pandemic rescue fund that will involve fiscal transfers from the wealthy north of Europe to the worst-affected countries in the south.

U.S. Treasury yields have also fallen closer to zero, bringing them nearer to the euro zone’s negative rates, and America’s growth forecasts are starting to look similar to Europe’s. As such, there’s less reason for investors to keep so many eggs in the dollar basket. The problem for the European Central Bank is that an overly robust currency might seriously hinder the continent’s fragile post-coronavirus recovery.

The U.S. Federal Reserve was struggling with a too-strong dollar at the height of the crisis, but it has successfully managed to contain that and it now looks supremely relaxed with greenback weakness. Fed officials are pushing for more fiscal stimulus and are committed to more monetary action as required. That’s a worry for the ECB, which wants to prevent the euro from appreciating too far or too fast.

The EU has long enjoyed a current account surplus, fueled by its dynamic export sector and helped by a relatively weak euro. But such benign conditions don’t last forever. There’s a global scramble to reboot economies and engineering a weaker currency is one of the obvious tools in the box.

Despite ECB protestations to the contrary, large-scale unconventional monetary action is really all about reining in your currency — hence the regular accusations from U.S. President Donald Trump of foreign-exchange manipulation against all countries engaged in quantitative easing. (He’s gone quiet on the subject now that the U.S. is doing the same.) By artificially lowering yields through huge bond-buying programs, the ECB has prompted investors to look elsewhere for returns, thereby keeping the euro’s price contained. But this only works if no one else is doing the same.

The Fed and the Bank of England have noisily gatecrashed the ECB’s QE party by cutting rates deeper during the coronavirus crisis and front-loading ever larger amounts of stimulus. This leaves the ECB without any obvious levers to pull on to prevent the euro rising. Even before the crisis, it had negative interest rates and a vast QE program in operation. The U.S. Federal Reserve and BOE, which still have marginally positive interest rates, have more ammunition left.

Ironically, one of the main reasons for steering clear of the euro — fear about the bloc’s unity — has been removed by the groundbreaking agreement for the €750 billion ($888 billion) pandemic recovery fund. With the European Commission set to issue as much as €200 billion of debt next year, at a decent premium over German bunds, there will be liquid bonds available for foreign investors that won’t be punitively negative in yield.

Currency valuations ultimately are driven by relative growth expectations and Europe is attracting interest for this reason too. The usual tendency for U.S. growth to exceed Europe’s has moderated during the crisis. It might even reverse.

One can hardly complain about Europe’s relatively good performance in handling the pandemic, but this success will be worth less if the continent’s export-led model suffers. The ECB may be near powerless to prevent the euro achieving even greater heights if the dollar weakens much further.

Marcus Ashworth is a Bloomberg Opinion columnist covering European markets.

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