Euro Rallies Higher on Positive Sentiment Amid Italy’s Defiance

The  euro today rallied higher against the  US dollar driven by  positive market sentiment backed by  investors’ expectations of  a  future US-China trade deal. However, the  single currency’s rally was significantly hampered by  the  ongoing standoff between the  EU and  Italy regarding its 2019 budget plans.
The  EUR/USD currency pair today rallied from a  low of  1.1219 to  a  high of  1.1271 in  the  early American session.
The  currency pair’s initial rally was largely supported by  investor optimism regarding the  potential outcome of  the  latest US-China trade talks. Most investors cannot wait for  the  resolution of  the  Sino-US trade war that has derailed global economic growth. The  release of  the  German consumer price index data for  October by  the  Federal Statistical Office in  the  early European session had a  muted impact on  the  currency pair. The  monthly CPI print came in  at  0.2%, which translated into an  annualized 2.5%, as  both prints met expectations. The  pair rallied higher after the  release of  the  German ZEW survey data for  October, which had mixed results. The  ZEW survey current situation data missed expectations, while the  economic sentiment survey and  the  economic expectations data were within expectations.
The  currency pair’s performance was further weighed down by  Italy’s defiance towards the  European Union given that today was the  deadline for  the  country to  submit a  revised draft of  its 2019 budget.
The  currency pair’s short-term performance is likely to  be influenced by  developments in  the  Italy-EU standoff.
The  EUR/USD currency pair was trading at  1.1269 as  at  14:41 GMT having risen from a  low of  1.1219. The  EUR/JPY currency pair was trading at  128.43 having rallied from a  low of  127.48.

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