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Euro Rallies on Upbeat Sentiment and COVID-19 Vaccine Hopes

May 26, 2020 at 18:45 by Simon Mugo

Various euro bills

The euro today rallied higher against the US dollar breaking out of the sideways trading range it was stuck in yesterday driven by the prevailing risk-on market sentiment. The EUR/USD currency pair rallied higher driven by the prevalent optimism among investors regarding the reopening of European countries and a CVOID-19 vaccine.

The EUR/USD currency pair today rallied from an opening low of 1.0897 to a high of 1.0992 in the American session and was trading near these highs at the time of writing.

The resurgent investor risk appetite drove the currency pair’s rally as European countries move forward with the reopening of their economies. Investors were also motivated by news that the European Commission was finalising a significant stimulus package that would be bigger than the Franco-German proposal. News that Novavax was testing a coronavirus vaccine in a phase one trial also boosted investor sentiment. The positive German GfK consumer confidence survey for May, which met expectations also contributed to the pair’s rally.

The European Commission President, Ursula von der Leyen‘s tweet about the global COVID-19 fundraising efforts crossing the EUR9.5 billion mark also favoured the single currency; Investors ignored the rising tensions between the US and China.

The release of the upbeat US home sales data by the Census Bureau combined with the Conference Board‘s positive US consumer confidence report triggered a brief pullback in the pair.

The currency pair’s future performance is likely to be affected by tomorrow’s speech by the ECB President.

The EUR/USD currency pair was trading at 1.0989 as at 18:44 GMT having rallied from a low of 1.0897. The EUR/JPY currency pair was trading at 118.19 having risen from a low of 117.38.

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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