Euro Rallies to 5-Month Highs on US-China Trade Headlines

The euro today rallied against the US dollar extending Friday’s gains as the greenback struggled to keep up with its global peers given the elevated market risk appetite. The  EUR/USD currency pair rallied to  new multi-month highs setting the  single currency on  track to  finish the  year strongly boosted by  the  positive US-China trade headlines.
The EUR/USD currency pair today rallied to a 5-month high of 1.1211 in the Asian session before falling to a low of 1.1182 but had recovered all its losses at the time of writing.
The  currency pair rallied higher at  the  start of  today’s session as  news emerged that Chinese Vice-Premier Liu He was scheduled to  travel to  Washington DC later this week to  sign the  phase one trade deal. The news led to a rally in riskier assets such as stocks and currencies, including the euro as investor risk appetite soared. However, the US dollar recovered in the early American session following the release of the upbeat US trade balance report for  November. According to  the  Census Bureau, the  US   trade deficit shrunk to  $63.19 billion in  November from $66.8 billion in  October.
The  greenback’s rally was short-lived as  the  US Dollar Index later fell from its intraday high of  96.90 to  a  new low of  96.64. The  release of  the  upbeat US ISM Chicago PMI for  December, which came in  at  48.9 beating expectations set at  48.0 did not help the  pair.
The currency pair’s future performance is likely to be affected by geopolitical events ahead of the new year.
The  EUR/USD currency pair was trading at  1.1216 as  at  16:34 GMT having risen from a  low of  1.1182. The  EUR/JPY currency pair was trading at  122.10 having dropped from a  high of  122.48.

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