Euro Surges to 2-Year Highs Against the US Dollar, Later Retreats

The  euro today rallied to  new 2-year highs against the  US dollar mainly driven by  the  latter’s overall weakness as  tracked by  the  US Dollar Index. The  EUR/USD currency pair today hit a  high of  1.1966, which was last seen in  March 2018 driven by  the  bullish investor sentiment.
The  EUR/USD currency pair today rallied from an  opening low of  1.1874 to  a  27-month high of  1.1966 before giving up some of  its gains by  the  time of  writing.
US dollar dynamics mostly drove the  currency pair’s rally given the  lack of  any major releases from the  European docket. The  pair benefitted from the  heightened investor risk appetite, and  safe-haven flows into Gold, which crossed above the  $2,000 level yet again. The  dollar’s weakness was also fueled by  the  drop in  US 10-year Treasury yields, which lost over 4% today, triggering a  mass exit of  investors. The  pair later gave up some of  its gains as  investors took profits on  their positions, but was still higher for  the  day.
The  pair’s movements were barely affected by  the  release of  the  US building permits and  housing starts report for  July. According to  the  Census Bureau, the  US issued 1.495 million building permits resulting in  1.496 million housing starts comfortably surpassing analysts’ expectations.
The  currency pair’s future performance is likely to  be affected by  tomorrow’s eurozone CPI and  US dollar dynamics.
The EUR/USD currency pair was trading at 1.1930 as at 18:26 GMT, having rallied from a low of 1.1874. The EUR/JPY currency pair was trading at 125.80, having risen from a low of 125.34.
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