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EUR/USD Rallies as Spanish Government Tightens Grip on Catalonia

October 19, 2017 at 14:09 by Simon Mugo

Euro banknotes and coinsThe EUR/USD currency pair rallied to new highs today despite the announcement by the Spanish government that it would invoke Article 155 suspending Catalonia’s autonomy. The currency pair rallied higher in the early North American session ignoring the release of positive US unemployment data by the Department of Labor.

The EUR/USD currency pair rallied by over 80 points from its daily low of 1.1767 established early in the European session.

Given today’s empty European docket, the news of the move by the Spanish government was the major driver behind the euro’s rally. The move followed today’s expiry of the deadline given to Catalan Prime Minister Carles Puigdemont to clarify whether or not he had declared independence. The implementation of Article 155 could lead to the dismantling of the Catalan government, which could be a major blow to the Catalan independence movement. This move could lead to civil unrest in Catalonia.

The US dollar was largely weaker against the euro as tracked by the US Dollar Index, which traded at lows round 93.00 today. The lower treasury yield’s contributed significantly to the greenback’s weakness. The release of the positive initial jobless claims data boosted the US dollar slightly, but the euro quickly rallied higher. The Philadelphia Fed Business Outlook also beat expectations by coming in at 27.9 versus the expected 22.0.

The currency pair’s future performance is likely to be affected by the release of US existing home sales data scheduled for tomorrow.

The EUR/USD currency pair was trading at 1.1847 as at 14:06 GMT having rallied from a daily low of 1.1767 earlier today. The EUR/JPY currency pair was trading at 133.14 having declined from a daily high of 133.61.

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

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