The euro today fell from its daily highs against the US dollar as markets reacted to news that the European Central Bank was considering a different approach to meet its inflation target. The EUR/USD currency pair later recovered given that the greenback was also under significant selling pressure as markets continue to price in a Fed rate cut on July 31.
The EUR/USD currency pair today fell from a session high of 1.1243 to a low of 1.1205 after the ECB news before retracing most of its losses.
The currency pair opened today’s session trading with a significant bullish bias given yesterday’s disappointing US housing data. The pair was further supported by declining US 10-year Treasury yields as well as market jitters regarding the ongoing Sino-US trade war. However, the single currency’s rally was limited by the lack of any major releases from the euro area. The pair fell to its daily lows follows reports that the ECB was considering changing its current inflation goal of below but close to 2% to a more symmetrical target. Investors interpreted the development as being a gateway to further quantitative easing programs by the ECB. The pair’s fall was accelerated by reports that the Italian government could be toppled.
The fiber recovered slightly despite the release of upbeat US initial jobless claims data and the Philadelphia Fed manufacturing survey for July.
The currency pair’s future performance is likely to be affected by tomorrow’s German PPI and US consumer sentiment data.
The EUR/USD currency pair was trading at 1.1224 as at 17:16 GMT having recovered from a low of 1.1205. The EUR/JPY currency pair was trading at 121.06 having risen from a low of 120.78.
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