Euro Rallies Higher Boosted by Positive Italy and Brexit Expectations

The euro today rallied higher against the US dollar during the European session as market sentiment stabilized on positive developments in the Italian budget standoff. Positive PMI releases by IHS Markit from across the eurozone also contributed to the EUR/USD currency pair’s rally as did the latest Brexit developments.
The EUR/USD currency pair today rallied from a low of 1.1316 in the late Asian session to a high of 1.1361 in the early American session.
The currency pair’s initial rally could be attributed to yesterday’s ECJ Brexit opinion piece, which increased the chances of the UK remaining in the European Union. The expectation that Italy’s government will make concessions to meet the European Commission’s requirements also boosted the currency pair. The release of the Markit Services PMIs from Italy, Germany and France, all of which beat expectations, also contributed to the pair’s rally. The Markit eurozone services PMI also beat consensus estimates by coming in at 53.4 versus the expected 53.1 and boosted the pair.
The eurozone retail sales data released by Eurostat came in at 0.3% in October, which was higher than the expected 0.2% print, contributing to the pair’s rally. The pair fell slightly the recovered after the release of the US MBA mortgage applications data for November and the speech by the US Fed Randal Quarles in the early American session.
The currency pair’s short-term performance is likely to be affected by the release of the US ISM non-manufacturing/services PMI later today.
The EUR/USD currency pair was trading at 1.1357 as at 13:55 GMT having rallied from a low of 1.1316. The EUR/JPY currency pair was trading at 128.43 having risen from a low of 127.79.

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