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EUR/USD Weakens as the US Dollar Rallies Despite Negative Home Sales Data

January 26, 2017 at 18:06 by Simon Mugo

Focus on hundred dollarsThe EUR/USD currency pair traded lower today as the US dollar rose despite the release of lower than expected home sales figures by the US Census Bureau that witnessed a 10.4% monthly drop. The euro’s downslide was also accelerated by the release of the flash Markit US services PMI figures, which indicated that expansion in the US service sector was at its fastest rate since November 2015.

The US Dollar Index rose to 100.70 having started the day at 99.85, while the euro lost significant ground against the US dollar, after the release of the Markit data.

The lower than expected home sales figures and the and the disappointing jobless claims data contributed to the greenback’s sluggish recovery today. The currency pair has been trading at a 7-week low and the Markit report did little to boost its recovery.

The currency pair was also affected by the bullish trend in US equities as the Dow hit the 20,000 mark yesterday. The euro has also been boosted by positive economic data from the Eurozone, but the European Central Bank‘s dovish policies have limited the euro’s recovery.

The currency pair’s performance is likely to be influenced by changes in the short-term yields of US treasuries, which are inextricably linked to the currency pair. The release of France’s consumer confidence index is also likely to influence the euro’s strength.

The EUR/USD was trading at 1.0681 as at 17:49 GMT having opened the day trading at 1.0762. The AUD/USD was trading at 0.7536 having started the day trading at 0.7577.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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