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Euro Rallies to 2-Month Highs on Positive Euro Area Data, Sentiment

June 3, 2020 at 18:46 by Simon Mugo

Assorted stacks of euro coins with euro banknotesThe euro today rallied to new 2-month highs against the US dollar boosted by the improved market risk appetite as most equity markets across the globe rally. The EUR/USD currency pair gains came at the greenback’s expense, which lost ground against other currencies as investor demand for safe-haven assets receded.

The EUR/USD currency pair today rallied from an opening low of 1.1179 to a high of 1.1251 in the American session and was trading near these highs at the time of writing.

The currency pair’s rally today was primarily driven by positive investor sentiment as the greenback remained on the backfoot. The release of positive PMI data from across the euro area by Markit Economics also boosted the pair. The weak German unemployment report released by the Federal Statistical Office had a muted impact on the pair. Both the unemployment rate and the number of job losses were higher than expected in May. The upbeat Markit Germany Services for May also drove the pair higher. The positive Markit eurozone services PMI, and composite PMIs also contributed to the euro’s rally. The euro had a muted reaction to the disappointing euro area PPI data released by Eurostat.

The positive eurozone unemployment rate, which came in at 7.3% versus the expected 8.2%, also pushed the euro higher. The upbeat US ADP employment change report drove the pair lower. The pair kept rallying despite the release of the US ISM non-manufacturing PMI during the American session.

The currency pair’s future performance is likely to be affected by the ECB interest rate decision.

The EUR/USD currency pair was trading at 1.1234 as at 18:45 GMT, having rallied from a low of 1.1179. The EUR/JPY currency pair was trading at 122.39, having risen from a low of 121.25.

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