The Value of the Euro Has Risen to its Highest Point Since September 2021. On Tuesday, the European Currency Climbed About 1 percent, Bringing the Euro to Almost $ 1,188. On Wednesday Morning, that dropped slightly to $ 1,184.
The Rising Euro Exchange Rate is Mainly Due to Developments in the United States. The Labor Market in the US is in a slump. Investors Therefore Expect The Central Bank, The Federal Reserve, To Lower Interest Rates. A Lower Interest Rate Generally Makes the Domestic Currency Less Desirable.
Althegh the Decision is Yet to Come, Investors Have Already Tasks The Expectation Into Account in Their Decisions. The Fed Will Make The Interest Rate Decision later on Wednesday.
In Europe, there were some positive surprises. For Example, it emerged on Tuesday that industrial production in the eurozone has grown. In Addition, Investors in Germany, The Largest Economy in Europe, are more positive than expected.
If the US Central Bank Actual Lowers Interest Rates on Wednesday, that woulde recoive approach from President Donald Trump. He has long wanted the fed to adjusting interest rates downwards to boost the economy. If interest rates are lower, companies can borrow more cheaply to finance expansions. Consumers are also more likely to spend their money.
Because interest rate cut so far failed to materialize, Trump HAS PUT Considerable Pressure on the Management of the Central Bank. For Example, he has repeatedly called fed chairman Jerome Powell ‘Mr. Late ‘. He is also trying to remove board member Lisa Cook, and Stephen Miran, A Confidant of the President, Has Been Included on Trump’s recommendation.
Dollar made a dive this year
At the beginning of the year, a euro cost $ 1.03. Some experts then expected the Euro and the Dollar to Soon Be Worth the Same. But The Exchange Rate Moved in A Different Direction in The Months That Followed.
This was partly due to the aforementioned attacks on the central bank. IT MUST Operate Independently of the Government.
The Volatility of Trump’s policies also played a Role. For Example, Earlier This Year He Introduced Many Import Duties, which he then Lowered or Scrapped again, Only to then Reintroduce or Increase them. Investors Hate Uncertainty.