Euro Rallies Post Christmas on Italian Budget News and US Politics

The  euro today rallied higher against the  US dollar from the  Asian session despite the  lack of  any major European releases. The  euro’s rally was largely driven by  market concerns about the  ongoing partial US government shutdown, which resulted in  a  weak US dollar.
The  EUR/USD currency pair today rallied from an  opening low of  1.1356 to  a  high of  1.1400 in  the  early European session, but was unable to break above this crucial resistance level.
The  euro’s gains today could largely be attributed to  a  pullback after yesterday’s massive drop, which was triggered by  the  rally in  US equity markets. However, investor fears of  a  resumption of  trade war retaliatory actions dampened the  markets’ appetite for  the  greenback, which led to  an  outflow of  funds to  the  much riskier euro. The  release of  the  mostly dovish European Central Bank latest economic bulletin triggered a  slight retracement by  the  currency pair. The  latest Italian budget news published by  La Repubblica, which indicated that Italy’s parliament will vote on  the  budget by  29 December, also boosted the  pair.
A  news report by  Reuters earlier today indicated that President Donald Trump‘s administration was contemplating an  emergency decree barring US companies from using Huawei and  ZTE products. This news stocked market fears that the  US-China trade war could resume in  earnest next year.
The  currency pair’s short-term performance is likely to  be affected by  the  release of  the  US consumer confidence data later today.
The  EUR/USD currency pair was trading at  1.1395 as  at  10:28 GMT having rallied from a  low of  1.1356. The  EUR/JPY currency pair was trading at  126.26 having dropped from a  high of  126.68.

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