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Euro Rallies Higher on German Coalition Talks Breakthrough

January 12, 2018 at 15:15 by Simon Mugo

Euro banknotes and coinsThe euro today rallied higher against the US dollar after news emerged that Angela Merkel was finally on the verge of forming a coalition government. The euro extended yesterday’s rally, which was triggered by the hawkish European Central Bank minutes, as the German political headlines ended months of uncertainty.

The EUR/USD currency pair gained over 100 points to rally from a low of 1.2039 to a high of 1.2149 in the early American session.

The euro’s biggest rally was in the early European session after news emerged that German political leaders had reached a breakthrough in their talks to form a new government. The currency pair’s rally was also boosted by the bearish investor sentiment towards the greenback, as tracked by the US Dollar Index, which hit a low of 91.24 earlier today, it’s lowest level since September. The euro also solidified the gains it made yesterday after the release of the hawkish ECB account of monetary policy meeting.

Mixed releases from the US Docket also contributed to the pair’s rally. The positive CPI data released by the Bureau of Labor Statistics, which increased by 0.1% in December meeting expectations, could not reverse the rally. The advance retails sales for December released by the Census Bureau came in at 0.4% on a monthly basis, which was lower than the expected 0.5%. The average hourly earnings grew by 0.4% in December as opposed to the previous 0.2%.

The currency pair’s future performance is likely to be affected by political events in the Eurozone and US over the upcoming weekend.

The EUR/USD currency pair was trading at 1.2139 as at 15:11 GMT having rallied from a low of 1.2039. The EUR/JPY currency pair was trading at 135.27 having risen from a low of 133.91.

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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