The Euro is trading at its highest level against the Dollar since the UK’s vote to leave the European Union. EUR/USD has improved over the past few months, due to the weakness of the dollar. The Fed had been expected to increase the interest rate, but the likelihood of that has largely faded. In July, the EUR/USD exchange hit a low point of 1.0950, but has rebounded slightly to 1.1350 as at noon.
The European Central Bank is set to meet on the 8th of September, and if their last meeting is any indication, no changes to monetary policy are to be expected. The EU is in a state of uncertainty as to how to ensure the region’s growth post Brexit. For the time being, the performance of the EUR/USD pair is in the hands of the dollar.
The minutes from the Fed’s meeting in July showed that the members were divided as to the need for another rate hike. The Fed increased the interest rate in December for the first time in almost a decade. There is the possibility of the rate being increased at their next meeting in September, but that will be based on the state of their economy. Many analysts don’t see the meetings in September of both the Fed and the ECB bringing about much change. The Fed increasing the rate will hurt employment figures in the US, while things in Europe are still uncertain but fairing much better than the UK.