The euro today rallied higher against the US dollar in a move driven by improved market risk sentiment on the last trading day before Christmas. The euro rallied higher in Contrast to Friday’s massive decline against the US dollar, which was weighed down by negative fundamental drivers today.
The EUR/USD currency pair today rallied from a low of 1.1368 to a high of 1.1411, but was stuck around the crucial 1.1400 level at the time of writing.
Today’s rally by the currency pair was largely driven by the risk-on investor sentiment amid concerns regarding a global economic slowdown, and the ongoing Sino-US trade war. The pair’s rally was constrained by the low liquidity levels witnessed across most markets as many traders have taken a break from the markets to celebrate Christmas. The pair’s rally was boosted by the uncertainty surrounding US politics as a partial government shutdown is underway, which may extend into next year due to President Donald Trump‘s desire for a border wall with Mexico.
The flattening yield curve affecting US Treasury bonds is also a source of concern for investors leading to the weaker greenback. President Trump’s verbal attacks on the Fed Chairman Jerome Powell regarding rate hikes has also left markets wandering whether the Fed Chair shall finish his term.
Given the lack of major releases from both the eurozone and the USA up to Thursday, the pair’s short-term performance will be influenced by investor sentiment.
The EUR/USD currency pair was trading at 1.1397 as at 11:54 GMT having rallied from a low of 1.1368. The EUR/JPY currency pair was trading at 126.59 having risen from a low of 126.25.
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