Euro Rallies Higher Boosted by Positive Italy and Brexit Expectations

The  euro today rallied higher against the  US dollar during the  European session as  market sentiment stabilized on  positive developments in  the  Italian budget standoff. Positive PMI releases by  IHS Markit from across the  eurozone also contributed to  the  EUR/USD currency pair’s rally as  did the  latest Brexit developments.
The  EUR/USD currency pair today rallied from a  low of  1.1316 in  the  late Asian session to  a  high of  1.1361 in  the early American session.
The  currency pair’s initial rally could be attributed to yesterday’s ECJ Brexit opinion piece, which increased the  chances of  the  UK remaining in  the  European Union. The  expectation that Italy’s government will make concessions to  meet the  European Commission’s requirements also boosted the  currency pair. The  release of  the  Markit Services PMIs from Italy, Germany and  France, all of  which beat expectations, also contributed to  the  pair’s rally. The  Markit eurozone services PMI also beat consensus estimates by  coming in  at  53.4 versus the  expected 53.1 and boosted the  pair.
The  eurozone retail sales data released by  Eurostat came in  at  0.3% in  October, which was higher than the  expected 0.2% print, contributing to  the  pair’s rally. The  pair fell slightly the  recovered after the  release of  the  US MBA mortgage applications data for  November and  the speech by the US Fed Randal Quarles in  the  early American session.
The  currency pair’s short-term performance is likely to  be affected by  the  release of  the  US ISM non-manufacturing/services PMI later today.
The  EUR/USD currency pair was trading at  1.1357 as  at  13:55 GMT having rallied from a  low of  1.1316. The  EUR/JPY currency pair was trading at  128.43 having risen from a  low of  127.79.

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