Euro Rallies Higher Despite Disappointing German Inflation Data

The  euro today rallied higher against the  US dollar despite the  release of  disappointing German inflation data in  the  mid-European session. The  EUR/USD currency pair broke out of  the  consolidative pattern that dominated the  Asian session due to  positive investor sentiment towards the  single currency.
The  EUR/USD currency pair today rallied from an  initial low of  1.1646 to  a  high of  1.1710 in  the  early American session.
The  currency pair’s bid tone today was largely influenced by  the  positive investor sentiment towards the  euro as  evidenced by  the  higher net euro longs in  the  latest Commitment of  Traders report. The  Commodity Futures Trading Commission stated that euro longs hit 3-week highs in  the  week ended July 24 reversing a  2-week losing trend. The  release of  the  Eurozone business climate and  economic confidence reports by  the  European Commission earlier today also boosted the  pair. The  economic sentiment indicator came in  at  112.1 beating expectations by  0.1 points, while the  business climate indicator decreased by  0.09 points to  come in  at  1.29 missing expectations.
The  release of  the  German consumer price index report by  the  Federal Statistical Office had a  muted impact on  the  pair as  it was recorded at  a  monthly 0.3% and  an  annualized 2.0%; both prints missed expectations by  0.1%. The  release of  the  positive US pending home sales data later today triggered a  slight pullback in  the  currency pair.
The  currency pair’s future performance is likely to  be affected by  tomorrow’s German unemployment data and  Eurozone GDP and  CPI data.
The  EUR/USD currency pair was trading at  1.1709 as  at  14:50 GMT having rallied from a  daily low of  1.1646. The  EUR/JPY currency pair was trading at  129.94 having risen from a  low of  129.30.

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