Euro Rallies on Dovish Fed Rumors, Declines Despite Weak US Data

The  euro today rallied higher against the  US dollar in  the  mid-European session following rumors that the  US Federal Reserve would pause its rate hikes in  Spring 2019. The  euro had rallied higher in  the  early European session after Italy’s Deputy Prime Minister Matteo Salvini teased that his government was willing to  make revisions to  its 2019 budget.
The  EUR/USD currency pair today rallied from a  low of  1.1363 to  a  high of  1.1425 before retracing some of  its gains.
The  currency pair traded in  a  tight consolidative range during the  Asian session as  most analysts expected the  pair to  head lower following yesterday’s massive drop. However, the  pair rallied higher in  the  early European session given the  rally in  Italian bond yields and  the  recovery witnessed across most European exchanges. The  currency pair rallied higher after the  European Commission rejected the  Italian budget proposals in  the  mid-European session and  recommended disciplinary measures against the  country. The  lower demand for  the  US dollar due to  the  risk-on sentiment caused the  US Dollar Index to  hit a  low of  96.50, which boosted the  currency pair.
The  currency pair headed lower from the  early American session despite the  release of  disappointing US durable goods orders by  the  Census Bureau. The  initial jobless claims data released by  the  Department of  Labor also missed expectations, but had a  muted impact on  the  pair.
The  pair’s future performance is likely to  be influenced by  tomorrow’s ECB meeting minutes given the  empty US dockets.
The  EUR/USD currency pair was trading at  1.1395 as  at  17:48 GMT having rallied from a  low of  1.1363. The  EUR/JPY currency pair was trading at  128.83 having risen from a  low of  128.13.

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