Euro Rallies Slightly Amid Stock Market Sell Off and Italian Politics

The  euro today rallied slightly against the  US dollar despite the  lack of  any major data releases from the  eurozone and  the  simmering Italian budget drama. The  EUR/USD currency pair’s rally is most likely due to  a  technical pullback given yesterday’s massive decline and the  risk-off market sentient that still exists.
The  EUR/USD currency pair today rallied from a  low of  1.1439 to  a  high of  1.1486 and  was trading near its daily highs at  the  time of  writing.
The  currency pair opened today’s session on  a  downtrend before rallying higher in  the  early European session following two positive releases from Germany. According to  the  Federal Statistical Office, Germany’s producer prices grew by  0.5% in  September versus the  expected 0.3% expansion. The  annual PPI figure also came in  at  3.2% beating expectations by  0.2%, which triggered the  pair’s initial rally. The  pair was also boosted by  the  positive reaction of  the  Italian government towards the  European Commission‘s expected rejection of  the  country’s budget. Italy’s deputy Prime Minister Luigi Di Maio was optimistic that the  two sides would reach an  agreement by  next week Monday.
The  risk-off market sentiment also capped the  currency pair’s gains given that the  UK government rejected the  EU’s backstop proposal even as  Brexit negotiations seem to  be making little headway.
The  currency pair’s short-term performance is likely to  be influenced by  the  release of  the  eurozone consumer confidence data later today as  well as  geopolitical developments.
The  EUR/USD currency pair was trading at  1.1474 as  at  12:37 GMT having risen from a  low   of  1.1439. The  EUR/JPY currency pair was trading at  128.72 having dropped from a  high of  129.31.

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