Euro Gains Against US Dollar Despite Weak German IFO Data

The  euro today rallied higher against the  US dollar from the  early European session largely driven by  positive market sentiment as  investors refrained from buying the  greenback. The  EUR/USD currency pair extended its rally despite the  release of  disappointing German IFO business climate index as  markets remained dovish towards the  US dollar ahead of tomorrow’s Fed interest rate decision.
The  EUR/USD currency pair today rallied from a  low of  1.1335 to  a  high of  1.1402 and  was slightly lower at  the  time of  writing.
The  pair’s rally was triggered by  the  growing dovish investor sentiment towards the  US dollar. despite this, the  euro faces major headwinds over the  short-term, which could significantly limit its upside potential. The  release of  the  German IFO business climate index could not derail the  currency pair’s rally despite all three prints missing expectations. The  IFO business climate data came in  at  101 missing expectations by  0.7, while the  IFO expectations was recorded at  97.3 missing consensus estimates by  1.0. The  current assessment data also missed expectations by  0.2.
The  pair’s rally was largely sustained by  negative market sentiment towards the  US dollar, which is unlikely to  change until tomorrow’s Fed monetary policy decision. Most investors expect a  dovish policy outlook by  the  Federal Reserve tomorrow, which could further boost the  pair.
The  currency pair’s future performance will be significantly influenced by  tomorrow’s FOMC interest rate decision and  monetary policy outlook statement.
The  EUR/USD currency pair was trading at  1.1399 as  at  11:41 GMT having rallied from a  low of  1.1335. The  EUR/JPY currency pair was trading at  127.95 having risen from a  low of  127.63.

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