What is making ECB President Christin Lagarde sleep badly at night? Apart from the loss of her immunity, it is probably the imminent reversal of the euro-yen carry trade. This reversal has been on the cards for some time, ever since it became clear that Japan would most likely see interest rate hikes and the gradual end of yield curve control due to inflation, while the recession-stricken eurozone is on the verge of interest rate cuts to release pressure from the boiler in order to save the ailing public finances of the euro member states and once again generate something like new anaemic growth, to which the citizens of the EU intervention prison seem to have long since become accustomed.

The collapse of the euro as an international settlement currency by over 20% last year already hinted at what the eurozone is heading for: a full-blown currency crisis with all its implied consequences, such as an expected banking crisis with inflation flaring up. Lagarde may soon have played her hand if the euro degenerates into a trash currency and is used as a vehicle for financing new carry trades abroad, thus revealing that further and further devaluation is to be expected.