The euro today traded sideways against the US dollar amid market concerns regarding the infrastructure spending plans of the Italian government. The recovery by the US dollar earlier today drove the EUR/USD currency pair lower, but the pair has since recovered most of its losses to trade sideways.
The EUR/USD currency pair today declined to a low of 1.1394, but later rallied higher to trade at 1.1443 at the time of writing.
The currency pair initially headed lower as it emerged that Italy’s government was planning on spending about â¬80 billion on infrastructure, which goes against European Union budgetary rules.The release of the German producer price index data by the Federal Statistical Office in the early European session had a muted impact on the currency pair as it extended its losses despite the print meeting expectations. The euro was further weighed down by the developments in Turkey where the country’s President Recep Tayyip Erdogan had issued some bold statements that could further strain relationships with the USA.
The pair’s recovery from the mid-European session could have been triggered by the rally in German 1-year bond yields, which had gained almost 4% to hit 0.316%. The US dollar later lost ground against the euro as tracked by the US Dollar Index due to an increase in the markets’ risk sentiment.
The currency pair’s future performance is likely to be affected by geopolitical events given tomorrow’s empty European and US dockets.
The EUR/USD currency pair was trading at 1.1435 as at 15:40 GMT having rallied from a low of 1.1394. The EUR/JPY currency pair was trading at 126.31 having dropped from a high of 126.44.
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