The head of the European Central Bank said that the economy is rebounding but that the recovery remains uncertain, incomplete and dependent on containing the virus outbreak.

ECB President Christine Lagarde told a joint meeting of parliamentary deputies from France and Germany on Monday that incoming data suggest a strong economic rebound in the third quarter, that is, July through September. But she added that “the strength of the recovery remains very uncertain, as well as uneven and incomplete.”

“It continues to be highly dependent on the future evolution of the pandemic and the success of containment policies,” she said.

The ECB is pumping 1.35 trillion euros ($1.6 trillion) in newly printed money into the economy through ongoing bond purchases through the end of next year. That is a large-scaled monetary stimulus aimed at preventing the pandemic from causing turmoil in financial markets, and at keeping borrowing costs low for companies to help support growth. The European Central Bank is the chief monetary authority for the 19 countries that use the euro, analogous to the Federal Reserve in the US or the Bank of England in Britain.

The European Central may protest that it does not intend to steer the euro’s exchange rate, but it has a large and growing influence on the single currency through its policy and communication, Bundesbank research suggested on Monday.

The ECB is in the difficult position of trying to keep a lid on the euro while avoiding the impression of starting a currency war or leaving itself open to accusations of exchange rate manipulation, such as those made by U.S. President Donald Trump in recent years.

Four Bundesbank studies published on Monday suggested that the ECB’s influence over the exchange rate, including against the US dollar, was large and had increased since the financial crisis, as had volatility on the days when it published its policy decisions.

One of the studies found that the ECB’s impact was strongest when its policy brought down long-term rates, estimating that the ECB could weaken the euro by 0.70% against the US dollar, Japanese yen and UK sterling by lowering the yield on Germany’s five-year government bonds by just 10 basis points.

“This suggests that potential effects on the exchange rate should be taken into account when communicating monetary policy,” the Bundesbank said.

The ECB was forced into hasty damage limitation earlier this month after President Christine Lagarde sent the euro rallying against the US dollar with a message that investors saw as too timid on the euro’s appreciation.

While the currency was eventually reined in, the incident highlighted the market’s sensitivity to ECB communication on the euro at a time when the Federal Reserve and all major central banks are also adopting aggressive stimulus policies to cheapen their currencies and navigate the coronavirus pandemic.

Euro zone bond yields fell on Monday, with the German 10-year yield hitting a six-week low, as rising cases of COVID-19 rattled investors and sent some looking for the safety of government debt.

The moves lower were contained, however, with last week’s dovish forward guidance from central banks keeping yields stuck in narrow ranges and investors awaiting a clutch of economic data this week.

Investors are becoming more cautious about Europe amid a sharp uptick in new COVID-19 cases. Denmark, Greece and Spain have introduced new restrictions on activity and Britain is considering a second national lockdown.

The German 10-year yield fell more than 3 basis points to -0.534%, its lowest level since early August, while the 10-year French yield declined 4 bps to -0.265%.

Despite Monday’s falls, core euro zone bond yields remain stuck in tight ranges as very accommodating monetary policy dominates trading.

The Financial Times, citing two European Central Bank governing council members, reported that the ECB had launched a review of its emergency bond purchase scheme introduced in response to the coronavirus crisis in March.

The review would consider how long the Pandemic Emergency Purchase Programme (PEPP) should continue and whether some of its extra flexibility should be transferred to the ECB’s longer running asset-purchase schemes, the newspaper said.

Many analysts and investors expect more ECB stimulus regardless of any review and the story had little immediate impact on bond yields.

“We find this surprisingly early, but at least this makes our call for more ECB action in December more solid in our opinion,” said Gilles Moec, AXA Group chief economist.

Agencies