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Euro Rallies on Improved Sentiment After US Stimulus Checks Vote

December 29, 2020 at 19:26 by Simon Mugo
EUR100, EUR200, and EUR500 notes with a chart

Today, the euro rallied against the dollar boosted by the risk-on market sentiment as global equities rallied just two days to the end of 2020. Investors remained bullish on the markets boosted by the US’s positive stimulus news, where lawmakers almost approved $2,000 stimulus checks.

The EUR/USD currency pair rallied to a high of 1.2275 before pulling back as the bullish momentum abated but was still trading way above its opening low of 1.2219 at the time of writing.

The currency pair opened the day’s session trending higher after the US House of Representatives voted to increase the stimulus checks being sent to jobless Americans from $600 to $2000. The Democrat-led House voted for the higher payments requested by President Donald Trump, but the Republican-led Senate is yet to approve the larger payments. The currency pair also benefited from news that the European Union and China were close to signing an investment deal that will give EU businesses greater access to China. The rally across most European equity markets led by the FTSE 100 and the Euronext 100 also fueled the currency pair’s rally.

The elevated investor risk appetite reduced demand for the safe-haven dollar as tracked by the US Dollar Index, which hit a low of 89.85 today. The lack of major fundamental releases from the European dockets put a lid on the currency pair’s gains.

The currency pair’s future performance is likely to be affected by market sentiment and US dollar dynamics.

The EUR/USD currency pair was trading at 1.2252 as at 19:25 GMT having fallen from a high of 1.2275. The EUR/JPY currency pair was trading at 126.90 having dropped from a high of 127.23.

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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