The euro today rallied higher against the US dollar from the early European session largely driven by positive market sentiment as investors refrained from buying the greenback. The EUR/USD currency pair extended its rally despite the release of disappointing German IFO business climate index as markets remained dovish towards the US dollar ahead of tomorrow’s Fed interest rate decision.
The EUR/USD currency pair today rallied from a low of 1.1335 to a high of 1.1402 and was slightly lower at the time of writing.
The pair’s rally was triggered by the growing dovish investor sentiment towards the US dollar. despite this, the euro faces major headwinds over the short-term, which could significantly limit its upside potential. The release of the German IFO business climate index could not derail the currency pair’s rally despite all three prints missing expectations. The IFO business climate data came in at 101 missing expectations by 0.7, while the IFO expectations was recorded at 97.3 missing consensus estimates by 1.0. The current assessment data also missed expectations by 0.2.
The pair’s rally was largely sustained by negative market sentiment towards the US dollar, which is unlikely to change until tomorrow’s Fed monetary policy decision. Most investors expect a dovish policy outlook by the Federal Reserve tomorrow, which could further boost the pair.
The currency pair’s future performance will be significantly influenced by tomorrow’s FOMC interest rate decision and monetary policy outlook statement.
The EUR/USD currency pair was trading at 1.1399 as at 11:41 GMT having rallied from a low of 1.1335. The EUR/JPY currency pair was trading at 127.95 having risen from a low of 127.63.
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