Euro Stabilizes on Italian Budget Concerns Amid Recovering US Dollar

The  euro today traded sideways against the  US dollar amid market concerns regarding the  infrastructure spending plans of  the  Italian government. The  recovery by  the  US dollar earlier today drove the  EUR/USD currency pair lower, but the  pair has since recovered most of  its losses to  trade sideways.
The  EUR/USD currency pair today declined to  a  low of  1.1394, but later rallied higher to  trade at  1.1443 at  the  time of  writing.
The  currency pair initially headed lower as  it emerged that Italy’s government was planning on  spending about €80 billion on  infrastructure, which goes against European Union budgetary rules.The  release of  the  German producer price index data by  the  Federal Statistical Office in  the  early European session had a  muted impact on  the  currency pair as  it extended its losses despite the  print meeting expectations. The  euro was further weighed down by  the  developments in  Turkey where the  country’s President Recep Tayyip Erdogan had issued some bold statements that could further strain relationships with the  USA.
The  pair’s recovery from the  mid-European session could have been triggered by  the  rally in  German 1-year bond yields, which had gained almost 4% to  hit 0.316%. The  US dollar later lost ground against the  euro as  tracked by  the  US Dollar Index due to  an  increase in  the  markets’ risk sentiment.
The  currency pair’s future performance is likely to  be affected by  geopolitical events given tomorrow’s empty European and  US dockets.
The  EUR/USD currency pair was trading at  1.1435 as  at  15:40 GMT having rallied from a  low of  1.1394. The  EUR/JPY currency pair was trading at  126.31 having dropped from a  high of  126.44.

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