Notably, on 8 September – the day after the ECB press conference – a two-year-high was recorded with an exchange rate of USD 1.206 against the euro. Since then, the exchange rate has been fluctuating within a narrow corridor. But to be clear, the exchange rate of the euro is determined by market forces and it is not a policy target of the Eurosystem.
Activity in the bond market is also determined by the expectations among market participants concerning future monetary policy. The prospect that the monetary policy of the Eurosystem will remain very accommodative and the somewhat lowered expectations of a policy hike in the US are leading to declining yields on long-term government bonds at the current edge.