Euro Rallies on Risk-On Sentiment and Weak Dollar on Christmas Eve

The  euro today rallied higher against the  US dollar in  a  move driven by  improved market risk sentiment on  the  last trading day before Christmas. The  euro rallied higher in  Contrast to  Friday’s massive decline against the  US dollar, which was weighed down by  negative fundamental drivers today.
The  EUR/USD currency pair today rallied from a  low of  1.1368 to  a  high of  1.1411, but was stuck around the crucial 1.1400 level at  the  time of  writing.
Today’s rally by  the  currency pair was largely driven by  the  risk-on investor sentiment amid concerns regarding a  global economic slowdown, and  the  ongoing Sino-US trade war. The  pair’s rally was constrained by  the  low liquidity levels witnessed across most markets as many traders have taken a  break from the  markets to  celebrate Christmas. The  pair’s rally was boosted by  the  uncertainty surrounding US politics as  a  partial government shutdown is underway, which may extend into next year due to  President Donald Trump‘s desire for a border wall with Mexico.
The  flattening yield curve affecting US Treasury bonds is also a  source of  concern for  investors leading to the weaker greenback. President Trump’s verbal attacks on  the  Fed Chairman Jerome Powell regarding rate hikes has also left markets wandering whether the  Fed Chair shall finish his term.
Given the  lack of  major releases from both the  eurozone and  the  USA up to  Thursday, the  pair’s short-term performance will be influenced by  investor sentiment.
The  EUR/USD currency pair was trading at  1.1397 as  at  11:54 GMT having rallied from a  low of  1.1368. The  EUR/JPY currency pair was trading at  126.59 having risen from a  low of  126.25.

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