The euro today rallied higher against the US dollar from the Asian session despite the lack of any major European releases. The euro’s rally was largely driven by market concerns about the ongoing partial US government shutdown, which resulted in a weak US dollar.
The EUR/USD currency pair today rallied from an opening low of 1.1356 to a high of 1.1400 in the early European session, but was unable to break above this crucial resistance level.
The euro’s gains today could largely be attributed to a pullback after yesterday’s massive drop, which was triggered by the rally in US equity markets. However, investor fears of a resumption of trade war retaliatory actions dampened the markets’ appetite for the greenback, which led to an outflow of funds to the much riskier euro. The release of the mostly dovish European Central Bank latest economic bulletin triggered a slight retracement by the currency pair. The latest Italian budget news published by La Repubblica, which indicated that Italy’s parliament will vote on the budget by 29 December, also boosted the pair.
A news report by Reuters earlier today indicated that President Donald Trump‘s administration was contemplating an emergency decree barring US companies from using Huawei and ZTE products. This news stocked market fears that the US-China trade war could resume in earnest next year.
The currency pair’s short-term performance is likely to be affected by the release of the US consumer confidence data later today.
The EUR/USD currency pair was trading at 1.1395 as at 10:28 GMT having rallied from a low of 1.1356. The EUR/JPY currency pair was trading at 126.26 having dropped from a high of 126.68.
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