EUR/USD Rallies Higher on Record German Business Climate Index

The EUR/USD currency pair today rallied higher after the release of an extremely high German IFO business climate index  for the month of October. The currency pair’s rally was limited by the markets’ anticipation of the decision by the European Central Bank regarding the tapering of its quantitative easing program.

The currency pair rallied by over 45 points to hit new highs around 1.1800, despite a slight pullback after the release of US data.

The euro rallied higher against the US dollar after the release of the German IFO business sentiment data, which hit record highs in October. The business climate indicator was recorded at 116.7 versus the expected 115.1. The business expectations indicator also beat expectations by coming in at 109.1 as compared to the market consensus of 107.3. The current assessment level was also higher than expected.

The release of the positive US durable goods orders early in the American session triggered a slight pullback in the currency pair, but the pair later rallied higher. The durable goods orders released by the Census Bureau posted a 2.2% increase, which was higher than the expected 1.0% increase. The release of the US house price index, which came in at 0.7% versus the expected 0.4%, and the new home sales data, which also beat expectations by coming in 667,000 new houses also boosted the US dollar.

The release of the ECB’s interest rate decision and the US advanced goods trade balance, both scheduled for tomorrow, are likely to affect the currency pair’s future performance.

The EUR/USD currency pair was trading at 1.1799 a sat 14:13 GMT having rallied from a low of 1.1751 earlier today. The EUR/JPY currency pair was trading at 134.43 having risen from a daily low of 133.73.

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