The euro today rallied higher against the US dollar extending the gains made in a rally that was triggered by Mario Draghi‘s hawkish comments at a press conference yesterday. The euro was much stronger against a weak US dollar, which was negatively affected by the political turmoil in Washington as Donald Trump‘s administration failed to repeal Obamacare.
The EUR/USD pair hit a new 52-week high today as the investors expressed confidence in the single currency as opposed to the greenback.
The euro’s rally was mainly triggered by the fact that the markets had already priced-in a tapering of the European Central Bank‘s quantitative easing program in September or October. This is largely due to the fact that the ECB is likely to face issues with limits and capital requirements that would require the Bank to eventually taper its asset purchase program. The ECB released its Survey of Professional Forecasters, in which the inflation forecasts for the third quarter had been adjusted slightly downwards.
The euro’s rally has caused the US dollar to suffer as the US Dollar Index hit levels below 94.00 during today’s session. These levels were last witnessed in August 2016. The uncertainty in Washington as to whether Donald Trump shall gain support from his party members to implement his campaign promises has wreaked havoc on the greenback.
The currency pair’s future performance is likely to be affected by the release of various Markit PMI reports on Germany, the Eurozone and the USA, all scheduled for Monday.
The EUR/USD was trading at 1.1655 as at 15:20 GMT having dropped from a high of 1.1676 earlier today. The EUR/GBP was trading at 0.8984 having risen from a low of 0.8938.
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