Euro Rallies Against US Dollar Then Drops on Weak German CPI Data

The  euro today rallied against the  US dollar from the  Asian session and  maintained its gains into the  European session amid minimal holiday trading. However, the  single currency dropped slightly following the  release of  the  disappointing German consumer inflation data in  the  early American session.
The  EUR/USD currency pair today rallied from an  opening and  intra-day low of  1.1429 to  a  high of  1.1473 before dropping slightly later in  the  session.
The  currency pair’s initial rally was largely due to  the  weaker US dollar as  tracked by  the  US Dollar Index, which dropped to  a  weekly low of  96.19. The  ongoing partial US government shutdown and  the  trade tensions between the  US and  China weighed heavily on  the  greenback, which caused the euro to rally. However, the  release of  the  weak German consumer price index data by  the  Federal Statistical Office in  the  early American session triggered a  slight decline by  the  pair. The  preliminary German CPI print for  December came in  at  0.1%, which translated into an  annualized 1.7%; both prints missed expectations by  0.2%.
Despite the  fact that American equity markets led by  the  DJIA are expected to  open higher, investors are still quite bearish towards the  greenback. This is reflected by  the  fact that investors are currently pricing in  only one rate hike by  the  Federal Reserve next year, despite the  Fed’s plan for  two rate hikes.
The  currency pair’s performance over the  upcoming weekend is likely to  be influenced by  investor sentiment and  geopolitical events.
The  EUR/USD currency pair was trading at  1.1464 as  at  14:37 GMT having rallied from a  low of  1.1429. The  EUR/JPY currency pair was trading at  126.45 having fallen from a  high of  127.01.

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