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Euro Rallies on Investor Sentiment, Later Falls on US Dollar Strength

June 12, 2020 at 13:46 by Simon Mugo

An inclined stack of 1 euro coins

The euro today posted gains against the US dollar earlier in the session buoyed by investor sentiment amid optimism about the economic recovery in Europe. The EUR/USD currency pair later gave up its gains as the greenback rallied amid the risk-off market environment as most European equities sold off at the open and headed lower.

The EUR/USD currency pair today rallied from a low of 1.1276 in the Asian session to a high of 1.1340 in the early European session but was off these highs at the time of writing.

The currency pair rallied higher during the Asian session buoyed by investor optimism as coronavirus cases in Europe remain on a downward trend. However, this may not last given the recent demonstrations that have rocked most of Europe. The pair headed lower in the early European session as European shares fell and fears of a second wave of coronavirus infections soured investor risk appetite. News that Angela Merkel’s government had approved a reduction in VAT had little impact on the currency pair. The release of the eurozone industrial production report for April by Eurostat, which fell 17.1% versus the expected 20%, could not stop the pair’s decline.

The currency pair’s decline also coincided with the greenback’s recovery as tracked by the US Dollar Index. The release of mixed US import and export price indices by the Bureau of Labor Statistics contributed to the pair’s pullback.

The currency pair’s performance over the weekend is likely to be affected by geopolitical events and investor sentiment.

The EUR/USD currency pair was trading at 1.1319 as at 13:45 GMT, having rallied from a low of 1.1276. The EUR/JPY currency pair was trading at 121.42, having risen from a low of 120.25.

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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