Euro Reached New Highs, U.S. Dollar Dropped

BusinessEuro Reached New Highs, U.S. Dollar Dropped

Euro Reached New Highs, U.S. Dollar Dropped

While Europe is undergoing a new lockdown the White House has just announced it halted talks with Democrats to issue more COVID relief.
Lately, the European Central Bank has decided to give a big push to the Old Continent’s economy. Something that could have been seen beneficial, only if the rise of the “strong euro” wasn’t scaring off investors.
While experts worry across the Atlantic, investors seem to be eying the European Union – in the hope of an upcoming vaccine. 

According to BCE, strong euro is “a headache”

2020 has been a rollercoaster on all fronts and finance has seen highs and lows on an unprecedented level. Euro has reached  historical values and has risen by 10 percent since March.
Mid-September, officials from the European Central Bank gathered and expressed their worry on such a situation, describing a strong euro as an economical headache. 
“The bank’s Governing Council did not make any changes to its stimulus program, which is already enormous, or to interest rates. But Christine Lagarde, the central bank’s president, signalled that policymakers were concerned about the euro’s rise”, published the New York Times. 

Read on Alvexo: “Dollar Drops to the Lowest Level Since 2018″

How BCE could regulate euro’s rate from afar

Since the European Central Bank cannot intervene directly on the markets and change the euro rate, Christine Lagarde, the head of the ECB, has declared that the institution will keep a close eye and monitor upcoming activity. 

Lagarde seemed particularly worried about inflation. A few days ago, she declared she would be ready to add “another stimulus”, to cut rates in order to support and stabilize the European economy.
According to Lagarde, who gave an interview to the Wall Street Journal on Monday, the European Union should get its economy back on track mid-2022 if – and only if – the world’s central bank keep on helping their countries. 

White House stopped stimulus relief talks

However, and in a historical twist of turn, the United States have decided not to play along.
Earlier on Tuesday, 5th October, Donald Trump declared that he had ended talks regarding renewing COVID-19 budget stimulus relief. Right after that announcement, U.S. markets fell after Trump rejected a $2.4 trillion relief fund proposal. 

Euro was up 0.11% by the end of the day, only worsening the gap between the American and the European currencies.
The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.