Euro Rallies Higher Despite Disappointing German Inflation Data

The euro today rallied higher against the US dollar despite the release of disappointing German inflation data in the mid-European session. The EUR/USD currency pair broke out of the consolidative pattern that dominated the Asian session due to positive investor sentiment towards the single currency.
The EUR/USD currency pair today rallied from an initial low of 1.1646 to a high of 1.1710 in the early American session.
The currency pair’s bid tone today was largely influenced by the positive investor sentiment towards the euro as evidenced by the higher net euro longs in the latest Commitment of Traders report. The Commodity Futures Trading Commission stated that euro longs hit 3-week highs in the week ended July 24 reversing a 2-week losing trend. The release of the Eurozone business climate and economic confidence reports by the European Commission earlier today also boosted the pair. The economic sentiment indicator came in at 112.1 beating expectations by 0.1 points, while the business climate indicator decreased by 0.09 points to come in at 1.29 missing expectations.
The release of the German consumer price index report by the Federal Statistical Office had a muted impact on the pair as it was recorded at a monthly 0.3% and an annualized 2.0%; both prints missed expectations by 0.1%. The release of the positive US pending home sales data later today triggered a slight pullback in the currency pair.
The currency pair’s future performance is likely to be affected by tomorrow’s German unemployment data and Eurozone GDP and CPI data.
The EUR/USD currency pair was trading at 1.1709 as at 14:50 GMT having rallied from a daily low of 1.1646. The EUR/JPY currency pair was trading at 129.94 having risen from a low of 129.30.

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