Euro Rallies Driven by Other Currency Cross, Drops on US GDP Data

The euro today rallied higher against the US dollar from the early European session driven largely by investor sentiment to hit over 3-week tops midway through the session. Shortly after, the EUR/USD currency pair plunged lower in a pullback that was compounded by the release of the upbeat US Q4 GDP data.
The EUR/USD currency pair today rallied from a low of 1.1366 to a more than 3-week high of 1.1420 before retracing all of its gains.
The currency pair was in a sideways trading range during the Asian session, but broke higher in the early European session. Although the rally had no clear origin, analysts postulated that it was a cross-rally linked to the EUR/GBP currency pair’s gains. The release of the German import price index for January by the Federal Statistical Office had a muted impact on the pair despite missing expectations. The release of the French Q4 GDP data by Insee had minimal impact on the pair as it kept rising. The pair also had a muted reaction to the upbeat German preliminary CPI data, which beat expectations, but could not stop the euro’s fall.
The pair’s fall in the American session was accelerated by the release of the US GDP data by the Bureau of Economic Analysis, which beat expectations by a margin. The weak US initial jobless claims data could not stop the pair’s fall.
The pair’s future performance is likely to be affected by tomorrow’s multiple high-impact eurozone and US releases.
The EUR/USD currency pair was trading at 1.1363 as at 15:28 GMT having crashed from a high of 1.1420. The EUR/GBP currency pair was trading at 0.8562 having dropped from a high of 0.8585.

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