Euro Rallies Against US Dollar on Split US Midterm Election Results

The  euro today rallied to  new 2-week highs against the  US dollar following the  results of  the  US midterm elections, which led to  a  split congress as  had been predicted by  most pundits. The  euro was further boosted by  positive macro releases from across the  euro area such as  the  German industrial production data for  September.
The  EUR/USD currency pair today dropped to  a  low of  1.1394 in  the  Asian session before rallying to  a  high of  1.1499 in  the  mid-European session.
The  pair’s rally was largely driven by  the  existing risk-on sentiment as  investors abandoned the  safe haven US dollar in  favor of  the  single currency. The  release of  the  latest German industrial production data by  the  Federal Statistical Office also boosted the  pair as  the  print came in  at  an  annualized 0.8% beating expectations by  0.3%. The  pair also rallied after the  release of  the  Markit Germany construction PMI for  October, which came in  at  49.8. The  release of  the  eurozone retail sales data for  September by  Eurostat had a  muted impact on  the  pair.
The  US dollar plunged to  new 2-week lows against most of  its peers as  tracked by  the  US Dollar Index after it emerged that the  Democrats had won the  218 seats needed to  control the  US House of  Representatives. This could derail President Donald Trump‘s agenda despite the  Republicans controlling the  Senate.
The  pair’s future performance is likely to  be affected by  tomorrow’s German trade data, US initial jobless claims data, and  the  FOMC rate decision.
The  EUR/USD currency pair was trading at  1.1496 as  at  11:44 GMT having rallied from a  low of  1.1394. The  EUR/JPY currency pair was trading at  129.98 having risen from a  low of  129.37.

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