EUR/USD Hits New Two-Year Highs on Weak US Dollar

The EUR/USD currency pair today hit a 31-month high during the North American session after the release of disappointing US advance goods trade balance data. The currency pair’s rally started on Friday after Janet Yellen‘s and Mario Draghi‘s speeches at the Jackson Hole symposium, which triggered the euro’s rally against the greenback.

The currency pair opened today’s session with a sudden decline from highs set during the Asian session, but later rallied by over 65 points during the American session.

The euro’s rally against the US dollar was triggered by the European Central Bank Governor’s lack of concern at the rising euro foreign exchange rate during the Jackson Hole symposium. Mario Draghi’s show of confidence in the Eurozone economy significantly boosted the single currency. The US dollar came under renewed selling pressure on Friday after the Federal Reserve chairperson, Janet Yellen, failed to speak on key monetary policy issues such as future rate hikes, and the reduction of the Fed’s balance sheet.

The release of the US advance goods trade balance data by the Census Bureau early in the American session also affected the greenback negatively as it missed expectations. The US Dollar Index, which tracks the greenback’s performance against its main peers, hit a new low of 92.19 last witnessed in May 2016. However, US wholesale inventories exceeded market expectations.

The currency pair’s future performance is likely to be affected by the release of US consumer confidence data and the German Gfk consumer confidence survey, both scheduled for tomorrow.

The EUR/USD pair was trading at 1.1978 as at 18:28 GMT having rallied from a low of 1.1914 earlier today. The USD/JPY pair was trading at 109.10 having dropped from a high of 109.41.

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