The euro today rallied to new 6-week highs against the US dollar after the release of the German IFO business climate data for November. The euro seemed to ignore the ongoing political woes facing Angela Merkel in Germany even as the three-way coalition talks fell apart.
The EUR/USD currency pair rallied by about 40 points from its daily low of 1.1835 to hit a high of 1.1875 after the release of the German IFO data.
The release of the German IFO business climate survey results for the month of November was the main driver behind the currency pair’s rally. The IFO business climate was recorded at 117.5, which was higher than the expected 116.5 and the previous 116.7. The IFO expectations also beat consensus by coming in at 111.0 versus the expected 108.8. The IFO survey indicates that businesses are ignoring the ongoing German political chaos even as Angela Merkel failed to reach an agreement with other smaller parties in order to form a coalition government.
The US dollar was under fresh selling pressure in the early European session as tracked by the US Dollar Index, which hit a low of 93.02 and contributed to the pair’s rally. The IFO results also indicated that German business morale was not affected by the European Central Bank‘s decision to reduce its monthly bond purchases.
The currency pair’s short-term performance is likely to be affected by speeches from ECB members Vitor Constancio and Benoit Coeure, as well as the Markit US Composite PMI.
The EUR/USD currency pair was trading at 1.1860 as at 11:34 GMT having retraced some of its gains from a daily high of 1.1875. The EUR/JPY currency pair was trading at 132.24 having rallied from a low of 131.81 earlier today.
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