EURO Rises and Falls As ECB, Brexit Spurred Volatility, USD Stays Strong

The ECB has announced its latest monetary policy decision that boosted the common currency and spurred dollar sales across the board. The central bank left rates and quantitative easing unchanged, as expected, although President Lagarde is mostly optimistic about the economic recovery. Politicians are aware of the exchange rate but have not demonstrated any targets for intervention in the markets, further fueling demand for the euro.

Optimism faded ahead of the opening of the door in the US, hit by problems with Brexit. Diplomats from the EU and the UK have met for urgent talks after Prime Minister Boris Johnson announced plans to revoke parts of the Withdrawal Agreement. After the discussion, the European Commission said that if the UK passed the Internal Markets Law, it would be an extremely serious violation of the Withdrawal Agreement and international law.

Even further, they stated that the UK has “seriously damaged trust” and threatened with “legal remedies” to address violations of the legal obligations contained in the text and, if the bill is not amended before the month-end. GBP/USD collapsed sub-1.2800.
EURO Rises and Falls on ECB’s Release
The euro is picking up noticeably as the ECB insists it is not targeting the exchange rate despite its recent appreciation, suggesting that they are still happy with the current level. The single currency is also driving up the Swiss franc. On the other hand, the sterling is left behind as large European companies.

The pound is experiencing another round of sell-off as the EU’s chief Brexit negotiator Michel Barnier said he had not seen any progress so far ahead of the “emergency” meeting in the UK. The dollar is currently ranked second on the weakest list thanks to a rally in the euro.