Euro Fails to Hold On to Gains on Resurgent US Dollar Demand

The  euro today rallied to  new highs in  the  early European session even as  German bond yields hit new tops and  the  US dollar retreated. However, the  EUR/USD currency pair proceeded to  give up all its gains as  the  greenback rebounded amid rising US bond yields and  Irish border concerns.
The  EUR/USD currency pair today rallied to  a  high of  1.1715 before retracing all its gains to  fall to  a  low of  1.1649 in  the  early American session.
The  currency pair’s initial rally was triggered by  the  rise in  German 10-year yields to  hit a  3-month high above 0.50%, which was a  gain of  2.70%. The  rally was largely due to  today’s sale of  â‚¬3 billion long-term German debt. Another trigger for  the  rally was the  investor fears regarding the  US-China trade war, which caused the  US Dollar Index to  hit a  7-week low of  94.32. The  pair started declining as  the  buying pressure on  the  greenback increased and  the  DXY recovered. A  speech by  Mario Draghi in  Berlin later in  the  session failed to  stimulate the  euro’s recovery.
The  emergence of  negative news headlines involving Michel Barnier and  the  UK Prime Minister regarding the  Irish border also weakened the  euro. The  release of  the  positive US current account data, which showed that the  trade deficit dropped 17% in  Q2 also boosted the  greenback.
The  pair’s future performance is likely to  be affected by  tomorrow’s EU Heads of  State meeting and  multiple US macro releases.
The  EUR/USD currency pair was trading at  1.1685 as  at  15:45 GMT having dropped from a  high of  1.1715. The  EUR/JPY currency pair was trading at  131.11 having declined from a  high of  131.68.

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