Edgar Meister, member of the German central bank's directorate, said a rate hike could strengthen investors' confidence. However, he stressed that he was not forecasting that rates would rise in the coming months. The euro's weakness sits uneasy with confident predictions by EU politicians that the euro would be a strong currency that could rival the US dollar. Europe's largest economy, Germany, is flagging and urgently needs a boost for its export industry. UK exporters are suffering from the strong pound and would dearly love to see the currency appreciate.
Economic growth is the key to the euro's fortunes, though.
Europe's big economies are flagging, hurting government revenues and threatening targets to reduce public deficits. In contrast, the US economy is going from strength to strength. This boosts the US dollar - and the pound, which tends to mirror the dollar's market movements. The EU's Romano Prodi believes the euro's decline is not worrying Meanwhile, attempts to talk up the euro continue, although the markets take less and less notice. European leaders have another chance to reassure the markets, when they meet on Thursday and Friday in Cologne, Germany, for an EU summit.