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Euro Falls Against Strong Dollar Despite Revived Stimulus Talks

October 8, 2020 at 16:51 by Simon Mugo
10 and 20 eurocent coins and 10 and 20 euro notes

The euro today fell against the US dollar driven by the risk-off market mood, which saw riskier assets selloff in favour of safe-haven assets such as the greenback. The EUR/USD currency pair’s decline occurred at a major resistance level as sellers stepped in driving the pair to its daily lows buoyed by the weak German data.

The EUR/USD currency pair today rallied to a high of 1.1781 in the early Frankfurt session before falling to a low of 1.1733 in the early American market but was off these lows at the time of writing.

The euro’s initial rally was driven by investor hopes that President Donald Trump and Nancy Pelosi would agree on a stimulus bill before the November 3 election after Trump said that the talks were back on. The release of the disappointing German trade balance report for August contributed to the pair’s decline. According to the Federal Statistical Office, Germany’s trade surplus fell to 15.7 billion versus the expected 18.2 billion print. The release of the European Central Bank minutes of the last Governing Council monetary policy meeting revealed that the bank was monitoring the euro’s exchange rate.

The release of the US initial jobless claims report in the early American session drove the pair to its daily lows. According to the Department of Labor, new unemployment claims fell to 840,000 boosting the greenback as tracked by the US Dollar Index.

The currency pair’s future performance is likely to be affected by US dollar dynamics given tomorrow’s empty European dockets.

The EUR/USD currency pair was trading at 1.1753 as at 16:50 GMT having fallen from a high of 1.1781. The EUR/JPY currency pair was trading at 124.58 having dropped from a high of 124.87.

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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