ECB Shake-up: Lagarde's Potential Early Departure Stirs Currency Markets

The euro faltered after reports suggested ECB President Christine Lagarde might leave her role early. Markets also focused on FED minutes and U.S. geopolitical dealings with Iran and Ukraine. Meanwhile, the kiwi dollar dropped following Reserve Bank of New Zealand's rate decision, and dollar-yen dynamics shifted with Japan's investment plans.

The euro took a slight hit on Wednesday amid reports claiming European Central Bank President Christine Lagarde plans to vacate her post before the end of her term in 2027. However, the ECB has clarified that no decision has been reached regarding her departure.

Lagarde, who led the ECB through aggressive policy measures to control inflation since 2019, may exit during a calmer economic phase as inflation nears target levels. Potential successors include Klaas Knot and Joachim Nagel, yet analysts note minimal near-term impact on euro policymaking.

In currency movements, the dollar gained ahead of the Federal Reserve's January meeting minutes, with a geopolitical lens on U.S. and Iran negotiations. Meanwhile, Japan's yen softened as the Trump administration announced $36 billion in projects financed by Tokyo, a strategic move to reduce tariffs, while New Zealand's kiwi slumped post the RBNZ's rate decision.

(With inputs from agencies.)