Euro Rallies Against US Dollar on Split US Midterm Election Results

The euro today rallied to new 2-week highs against the US dollar following the results of the US midterm elections, which led to a split congress as had been predicted by most pundits. The euro was further boosted by positive macro releases from across the euro area such as the German industrial production data for September.
The EUR/USD currency pair today dropped to a low of 1.1394 in the Asian session before rallying to a high of 1.1499 in the mid-European session.
The pair’s rally was largely driven by the existing risk-on sentiment as investors abandoned the safe haven US dollar in favor of the single currency. The release of the latest German industrial production data by the Federal Statistical Office also boosted the pair as the print came in at an annualized 0.8% beating expectations by 0.3%. The pair also rallied after the release of the Markit Germany construction PMI for October, which came in at 49.8. The release of the eurozone retail sales data for September by Eurostat had a muted impact on the pair.
The US dollar plunged to new 2-week lows against most of its peers as tracked by the US Dollar Index after it emerged that the Democrats had won the 218 seats needed to control the US House of Representatives. This could derail President Donald Trump‘s agenda despite the Republicans controlling the Senate.
The pair’s future performance is likely to be affected by tomorrow’s German trade data, US initial jobless claims data, and the FOMC rate decision.
The EUR/USD currency pair was trading at 1.1496 as at 11:44 GMT having rallied from a low of 1.1394. The EUR/JPY currency pair was trading at 129.98 having risen from a low of 129.37.

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