Euro Rallies on ECB Rate Decision Despite Dovish Comments by Lagarde

The euro rallied against the dollar today buoyed by the elevated risk appetite that saw the greenback sidelined in favor of riskier assets such as the single currency. The EUR/USD currency pair hit its daily highs after the European Central Bank released that it was leaving interest rates unchanged as expected after today’s meeting.
The EUR/USD currency pair rallied from an opening low of 1.2109 during the Australian market to a high of 1.2173 after the ECB’s decision but was off these highs at the time of writing.
The currency pair’s initial rally was boosted by Joe Biden’s inauguration yesterday given his plans to boost government spending in the United States. The single currency was also boosted by positive investor expectations about the ECB’s monetary policy decisions. The release of the French manufacturing business climate index by Insee, which came in at 98 versus consensus estimates of 94, also boosted the pair. The Italian industrial sales report for November released by Istat had a muted impact on the pair. Investors cheered the ECB Governing Council‘s decision to maintain interest rates and its Pandemic Emergency Purchase Programme (PEPP)at their current levels.
The pair gains were capped by the dovish tone adopted by ECB Governor Christine Lagarde as she stated that the bank wouEuro Rallies on ECB Rate Decision Despite Dovish Comments by Largadeld continue to monitor the euro’s exchange rate. Lagarde also warned that eurozone GDP probably contracted in Q4 and that the coronavirus lockdowns were hurting the economic recovery.
The currency pair’s future performance is likely to be affected by tomorrow’s eurozone and US Markit PMI releases
The EUR/USD currency pair was trading at 1.2155 as at 18:39 GMT having risen from a low of 1.2109. The EUR/JPY currency pair was trading at 125.85 having risen from a low of 125.38.
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Original from: www.earnforex.com