Euro Rallies After ECB Extends Stimulus Plan by €500Bn, Maintains Rates

The  euro today rallied higher against the  dollar after the  European Central Bank extended its stimulus programme and did not sound too dovish. The EUR/USD currency pair’s rally was also boosted by the upbeat market sentiment towards the single currency and the weak greenback.
The  EUR/USD currency pair today rallied from a  low of  1.2078 in  the  Australian market to  a  high of  1.2158 in  the  American session but later gave up some of  its gains.  
The  currency pair rallied earlier today as  investors waited for  the  ECB monetary policy statement and  interest rate decision. The pair then surged to its daily highs after the ECB’s Governing Council decided to leave interest rates unchanged at 0%, while the deposit rate at -0.5%. Investors were pleasantly surprised after the ECB decided to expand its Pandemic Emergency Purchase Programme (PEPP) by  â‚¬500 billion to  a  total of  â‚¬1,850 billion until the  end of  March 2022. Traders were pleased when the  ECB Governor Christine Lagarde said that the  bank was watching the  euro closely, but did not seem keen to  cut rates at  the  moment.  
The  dollar’s weakness as  tracked by  the  US Dollar Index, which hit a  low of  90.66 today, also contributed to  the  pair’s rally. The  surge in  US initial jobless claims reported today also fueled the  fibre’s rally. The  release of  the  in-line US consumer price index report for  November could not stop the  pair’s rally.
The  currency pair’s future performance is likely to  be influenced by  tomorrow’s German inflation data and  US dollar dynamics.
The  EUR/USD currency pair was trading at  1.2141 as  at  20:24 GMT having rallied from a  low of  1.2078. The  EUR/JPY currency pair was trading at  126.50 having risen from a  low of  125.94.
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