Bank of Portugal Governor Mr Vitor Constancio said this morning the euro had room to appreciate in value and forecast no European recession.
Mr Constancio, a European Central Bank (ECB) council member, added euro zone inflation should continue to ease and fall below 2 per cent, the ECB's target.
He said current conditions for monetary policy were settled and that the ECB would only make new decisions about interest rates with new information. The bank cut its key lending rate to 3.25 per cent last week.
Constancio's comments were in line with a report issued today in which the ECB said it expected further weak economic data to dampen the outlook for euro zone economic growth. The report also predicted the economy would pick up only after subdued growth extending into part of next year.
"The euro obviously has space to enhance its value," Mr Constancio told reporters on leaving a conference on financial regulation.
He said it was impossible to make a prediction about its short-term performance. "I don't foresee, contrary to what can happen to the US economy, a situation of recession in Europe," Constancio said. "Weak growth, yes, but not a recession.
"The conditions are for a drop in inflation. I think that nothing can affect the forecast that the inflation rate will be below 2 per cent in the euro zone," he said.