The eurozone is struggling to contain a growing flood of cheap, fast-moving European equities.
The European Central Bank has already reduced interest rates by half in three months.
Its goal is to keep inflation in check and to keep economic growth stable.
But the ECB’s decision to sell its bonds and mortgage-backed securities (MBS) to investors has also sparked panic.
Investors have been left scrambling to buy bonds with low yields or to refinance their loans.
The biggest risk is a plunge in inflation.
A new trend emerged last week as investors poured into the markets, with the euro rising to $1.2450, its highest level since April.
But as the market recovered from the initial shock, a number of stocks started to move up and down.
“There’s been a lot of panic, which is understandable.
The ECB has been trying to contain inflation and has a pretty solid record of managing it,” said Patrick Haddad, chief economist at S&P Dow Jones Indices in New York.”
This has a huge impact on the value of European stocks, and investors will need to be very careful if they are to take these markets seriously.”
The ECB announced on Tuesday it would sell €50 billion ($66 billion) of its bonds this year, while buying up another €60 billion.
The rest of the €60.6 billion will be paid back in 2026.
The move comes as the ECB aims to keep the euro as a reserve currency for Europe and help boost growth by buying more bonds from other central banks.
It also follows a wave of euro-denominated bond purchases by Germany and Italy in the first two months of the year, with Germany buying more than €100 billion in bonds from the ECB.
The ECB said the moves were necessary to support economic recovery.
“The European economy is resilient, and we can achieve much more together,” the central bank said in a statement.
“We need to do everything possible to ensure the strength of our financial system and support the European economy.”
The move also comes after the ECB raised interest rates for three months from 0.5 percent to 1.5%.
But the move has sparked anger in the markets.
“I’m very worried,” said Andrew Marder, chief investment officer at BDO Investment Management in New Orleans.
“It’s a bit like buying a cheap, dirty car with no fuel.”
European stocks are the most-traded in the world, with yields rising above 10 percent in recent months.
“They are just getting bigger and bigger,” Haddada said.
“You just have to be careful.”
The euro rose 1.7 percent to $2.0770 by 11:30 a.m. in London.