Euro Rallies Higher on Weak US CPI Data Amid Dovish ECB Rate Decision

The  euro today rallied higher against the  US dollar in  the  early American session following the  release of  disappointing US inflation data. The  EUR/USD currency pair barely reacted when the  European Central Bank announced its interest rate decision earlier today, which was in  line with expectations.
The  EUR/USD currency pair today rallied from a  low of  1.1608 to  a  high of  1.1677 and  was on  an  uptrend at  the  time of  writing.
The  currency pair was on  a  downtrend during the  Asian session, but started gaining slowly from the  early European session. The  currency barely moved when the  ECB announced its monetary policy decision, which was largely unchanged. The  ECB’s Governing Council voted to  maintain the  interest rate on refinancing operations at  0.000%, the  marginal lending facility interest rate at  0.25%, and  the  deposit facility at  -0.40%. In  the  press conference following the  announcement, ECB President Mario Draghi lowered expectations for  GDP growth in  the  eurozone for  2018 to  2.0% from the 2.1% witnessed in  June, which was interpreted as  being dovish.
The  release of  the  US Consumer Price Index data by  the  Bureau of  Labor Statistics is what triggered the  pair’s massive rally. The  CPI came in  at  0.2% in  August, which translated into an  annualized 2.7%; both prints missed expectations by  0.1%. The  positive initial jobless claims data had a  muted impact on  the  currency pair.
The  currency pair’s future performance is likely to  be affected by  tomorrow’s eurozone trade balance data and  US advance retail sales report.
The  EUR/USD currency pair was trading at  1.1690 as  at  13:26 GMT having rallied from a  low of  1.1608. The  EUR/JPY currency pair was trading at  130.25 having risen from a  low of  129.24.

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