The euro today rallied against the US dollar extending Friday’s gains as the greenback struggled to keep up with its global peers given the elevated market risk appetite. The EUR/USD currency pair rallied to new multi-month highs setting the single currency on track to finish the year strongly boosted by the positive US-China trade headlines.
The EUR/USD currency pair today rallied to a 5-month high of 1.1211 in the Asian session before falling to a low of 1.1182 but had recovered all its losses at the time of writing.
The currency pair rallied higher at the start of today’s session as news emerged that Chinese Vice-Premier Liu He was scheduled to travel to Washington DC later this week to sign the phase one trade deal. The news led to a rally in riskier assets such as stocks and currencies, including the euro as investor risk appetite soared. However, the US dollar recovered in the early American session following the release of the upbeat US trade balance report for November. According to the Census Bureau, the US trade deficit shrunk to $63.19 billion in November from $66.8 billion in October.
The greenback’s rally was short-lived as the US Dollar Index later fell from its intraday high of 96.90 to a new low of 96.64. The release of the upbeat US ISM Chicago PMI for December, which came in at 48.9 beating expectations set at 48.0 did not help the pair.
The currency pair’s future performance is likely to be affected by geopolitical events ahead of the new year.
The EUR/USD currency pair was trading at 1.1216 as at 16:34 GMT having risen from a low of 1.1182. The EUR/JPY currency pair was trading at 122.10 having dropped from a high of 122.48.
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