Euro Rallies After ECB Extends Stimulus Plan by €500Bn, Maintains Rates

The euro today rallied higher against the dollar after the European Central Bank extended its stimulus programme and did not sound too dovish. The EUR/USD currency pair’s rally was also boosted by the upbeat market sentiment towards the single currency and the weak greenback.
The EUR/USD currency pair today rallied from a low of 1.2078 in the Australian market to a high of 1.2158 in the American session but later gave up some of its gains. 
The currency pair rallied earlier today as investors waited for the ECB monetary policy statement and interest rate decision. The pair then surged to its daily highs after the ECB’s Governing Council decided to leave interest rates unchanged at 0%, while the deposit rate at -0.5%. Investors were pleasantly surprised after the ECB decided to expand its Pandemic Emergency Purchase Programme (PEPP) by €500 billion to a total of €1,850 billion until the end of March 2022. Traders were pleased when the ECB Governor Christine Lagarde said that the bank was watching the euro closely, but did not seem keen to cut rates at the moment. 
The dollar’s weakness as tracked by the US Dollar Index, which hit a low of 90.66 today, also contributed to the pair’s rally. The surge in US initial jobless claims reported today also fueled the fibre’s rally. The release of the in-line US consumer price index report for November could not stop the pair’s rally.
The currency pair’s future performance is likely to be influenced by tomorrow’s German inflation data and US dollar dynamics.
The EUR/USD currency pair was trading at 1.2141 as at 20:24 GMT having rallied from a low of 1.2078. The EUR/JPY currency pair was trading at 126.50 having risen from a low of 125.94.
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