Euro Rallies on US Stimulus Package Despite Weak German IFO Data

The  euro today rallied higher against the  US dollar driven by  the  markets higher risk appetite after the  US Senate agreed on  a  multi-trillion stimulus package. The  EUR/USD currency pair’s gains were also helped in  part by  the  easing demand for  the  US dollar after the  Federal Reserve provided swap lines for  the  currency.
The  EUR/USD currency pair today rallied from an  initial low of  1.0760 in  the  Asian session to  a  high of  1.0849 in  the  mid-European session but had given up most of  its gains at  the  time of  writing.
The  currency pair’s gains were driven by the  risk-on investor sentiment driven by the  approval of  the  multi-trillion-dollar US stimulus package. Investors across the  world were relieved by  the  deal as  evidenced by  the  overnight rally in  Asian equity markets and  the  rally by  European stocks at  the  start of  today’s session. The  release of  the  disappointing German IFO business climate index for  March, which came in  at  86.1 missing analysts’ expectations set at  87.7, did not affect the  pair negatively. The  IFO current assessment print also missed consensus estimates but had a  muted impact on  the  pair.
The  high availability of  US dollars in  the  European markets also boosted the  pair as  the  US Dollar Index fell to  a  low of  101.16 earlier today. However, this may not last long given that the  Bank of  Japan reported high demand for  dollars among Japanese banks.
The  currency pair’s future performance is likely to  be affected by  geopolitical events and  the  US durable goods orders set for  release later today.
The  EUR/USD currency pair was trading at  1.0826 as  at  11:35 GMT having risen from a  low of  1.0760. The  EUR/JPY currency pair was trading at  120.41 having rallied from a  low of  119.42.

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