The Bank of England also kept its key interest rate steady at 3.75 percent for the second month running but City pundits think it is likely to raise borrowing costs next month as the economy picks up speed.
In a subtle shift of language Trichet dropped his mantra that a strong and stable single currency was in the euro zone's interests, saying that the ECB disliked excessive volatility on the foreign exchange market.
German Economy Minister Wolfgang Clement said on Thursday he favoured an interest rate cut and that the euro's strength threatened Germany's growth outlook.
Clement became the first senior official of a major industrialised country to call for a rate cut as the euro has stormed up more than 20 percent against the dollar in the past year, and chimed in with business leaders worried about the effect on exports.
But speaking after the ECB Council left rates unchanged, Trichet said a global recovery would partly offset any damage the strong euro will have on euro zone exports. Moreover, the currency's strength was pushing down inflation.
The euro has gained some six percent versus the dollar since December alone.
"Although recent exchange rate developments are likely to have some dampening effects on exports, export growth should continue to benefit from the dynamic expansion of the world economy," Trichet told a news conference following the ECB's decision to leave its key rate unchanged at two percent.
Clement expressed disappointment that the ECB had not signalled its concern about the euro.
"It is not yet a catastrophe but the situation is becoming more tense," he told reporters in the German city of Leipzig.
Currency markets took Trichet's message to mean the ECB was not worried about the euro at its present level, and the single currency climbed back above $1.27. It reached new record highs this week, peaking briefly over $1.28 on Tuesday.
"I think we'd have to see the US dollar in freefall for the ECB to be spooked into cutting rates. The message was loud and clear: No panic here," said Ken Wattret at BNP Paribas.
Most analysts had predicted in a Reuters poll that the ECB would stay put this month and that it would wait until the second half of 2004 before raising rates as the euro zone economy speeds up.
EURO MACHO: Trichet steered clear of the ECB's standard muscular line that authorities favour strong and stable currencies, warning instead against frequent and hefty currency moves.
"We do not particularly like excessive volatility or excessive turbulences" in foreign exchange markets, Trichet said.
Currency analysts considered this relatively weak language and gave no sign that the ECB would intervene soon, as it has in the past when the euro was at life-lows against the dollar.
But the central bank is bound to shift its wording on the euro, long before it considers stepping into currency markets again, and the shift in language could well be a first sign.
"It is a signal that they are starting to worry but it is very short of signalling they ready to react," said Jose-Luis Alzola, economist at Citigroup.
But political pressure is mounting ahead of the Group of Seven meeting in February. Belgian Prime Minister Guy Verhofstadt and Germany's DIHK Association of Chambers of Commerce and Industry both called for lower interest rates to help weaken the euro against the dollar.
And German carmaker DaimlerChrysler said there could be a major impact on earnings at its Mercedes-Benz luxury unit if the euro stayed strong into 2005.
The euro's gains give the ECB more breathing space, as it saps inflation by lowering import prices. But Trichet repeated that the exchange rate is only one of many factors taken into account when solving the monetary policy equation.
OUTLOOK STILL UNCHANGED: So far, the perky euro has not changed the ECB's outlook that the 12 nation single currency bloc is slowly building up speed and inflation is not likely to rear its head soon - signalling rates are on hold for some time to come.
With interest rates at a record low, the global recovery gathering momentum and low inflation giving consumers lots of spending power, all conditions are in place for growth to pick up, Trichet said. Confidence was the only problem remaining.
"I think that that is one of the most important problems that we have and therefore we feel that we have to do everything to increase confidence," he said.
Financial markets have eased their aggressive bets on quick interest rate increases, now discounting roughly a 40 percent chance of quarter point rate rise by the end of June, and fully pricing in a half point hike only by the end of December.
Data underline that view. Euro zone economic sentiment dropped in December, EU data showed this week, casting doubt over any rosy outlook.
Moreover, the euro zone's service sector slowed its pace in December, the Reuters Eurozone Services survey showed, even though growth remained strong and a similar survey showed the manufacturing sector picked up speed.