Euro Rallies Then Falls Against the Dollar on Upbeat US Inflation

The  euro today rallied higher against the  US dollar following hawkish speeches by  European Central Bank policymakers during the  early European session. The  EUR/USD currency pair later gave up some of  its gains as  the  Brexit rhetoric weighed on  the  single currency combined with the  upbeat American inflation data.
The  EUR/USD currency pair today rallied from an  initial low of  1.1823 in  the  Australian market to  a  high of  1.1874 in  the  mid-European session before falling ahead of the  American session.
The  currency pair’s initial rally was boosted by  the  hawkish comments from ECB policymakers published by  Reuters. The  ECB Governor Christine Lagarde said that the  risk of  a  second wave of  coronavirus infections across the  euro area added uncertainty to  the  region’s economic recovery. Philip Lane, the  ECB’s Chief Economist, clarified that the  bank was open to  very accommodative policies. Isabel Schnabel, an  ECB’s Executive Board member, added that the  bank’s measures were working, but some of  them could take much longer to  bear fruit. The  release of  in-line German inflation data for  August by  the  Federal Statistical Office had a  muted impact on  the  pair.  
The  currency pair headed lower after the  EU gave Britain a  3-week ultimatum to  alter its stance on  Brexit, which soured investor risk appetite. The  release of  upbeat US inflation data for  August by  the  Bureau of  Labor Statistics also dragged the  pair lower.
The  currency pair’s performance over the  upcoming weekend is likely to  be affected by  geopolitical events.
The EUR/USD currency pair was trading at1.1836 as at 15:10 GMT, having fallen from a high of 1.1874. The EUR/JPY currency pair was trading at 125.70, having dropped from a high of 126.12.
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