Euro Rallies on Upbeat Eurozone Macro Reports, US Dollar Weakness

The euro rallied against the dollar booted by positive inflation data from Germany and other upbeat macro reports from across the euro area. The EUR/USD currency pair’s rally was also fueled by the dollar’s overall weakness following yesterday’s interest rate decision by the US Federal Reserve.
The EUR/USD currency pair rallied from a low of 1.2080 in the early Frankfurt session to a high of 1.2140 in the early North American session and was near these highs at the time of writing.
The currency pair’s initial decline was triggered by the dovish comments made by ECB policy makers yesterday who threatened to lower interest rates if the euro kept rising. The decline was short-lived as investor sentiment shifted in favor of the single currency after the European markets opened. The release of the upbeat eurozone economic sentiment and business climate indicators fueled the pair’s recovery. According to the European Commission, the region’s consumer confidence met consensus estimates set at -15.5, while the economic sentiment indicator beat analysts’ expectations.
The release of the upbeat preliminary German inflation report for January pushed the pair higher. According to the Federal Statistics Office, Germany’s harmonized CPI rose to 1.6% in January versus expectations of 0.5%.
The release of the in-line US Q4 2020 GDP data by the Bureau of Economic Analysis, which came in at 4% capped the pair’s gains. The upbeat weekly US initial jobless claims report also slowed down the pair.
The currency pair’s future performance is likely to be affected by tomorrow’s multiple European macro reports.
The EUR/USD currency pair was trading at 1.2133 as at 19:56 GMT having rallied from a low of 1.2080. The EUR/JPY currency pair was trading at 126.44 having risen from a low of 126.00.
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Original from: www.earnforex.com