The euro today rallied higher against the US dollar in the early American session following the release of disappointing US inflation data. The EUR/USD currency pair barely reacted when the European Central Bank announced its interest rate decision earlier today, which was in line with expectations.
The EUR/USD currency pair today rallied from a low of 1.1608 to a high of 1.1677 and was on an uptrend at the time of writing.
The currency pair was on a downtrend during the Asian session, but started gaining slowly from the early European session. The currency barely moved when the ECB announced its monetary policy decision, which was largely unchanged. The ECB’s Governing Council voted to maintain the interest rate on refinancing operations at 0.000%, the marginal lending facility interest rate at 0.25%, and the deposit facility at -0.40%. In the press conference following the announcement, ECB President Mario Draghi lowered expectations for GDP growth in the eurozone for 2018 to 2.0% from the 2.1% witnessed in June, which was interpreted as being dovish.
The release of the US Consumer Price Index data by the Bureau of Labor Statistics is what triggered the pair’s massive rally. The CPI came in at 0.2% in August, which translated into an annualized 2.7%; both prints missed expectations by 0.1%. The positive initial jobless claims data had a muted impact on the currency pair.
The currency pair’s future performance is likely to be affected by tomorrow’s eurozone trade balance data and US advance retail sales report.
The EUR/USD currency pair was trading at 1.1690 as at 13:26 GMT having rallied from a low of 1.1608. The EUR/JPY currency pair was trading at 130.25 having risen from a low of 129.24.
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