EUR/USD rallies beyond 0.9800 amid a brighter market sentiment
|- The euro hits session highs above 0.9800 after bouncing at 0.9720 lows.
- The common currency pares losses amid a broad-based USD weakness.
- EUR/USD seen retesting 0.9540 – ING.
The common currency has shrugged off the weakness observed last week to rally on Monday, amid an improved sentiment. The euro appreciates nearly 1% so far today bouncing up at 0.9720 area to hit session highs at 0.9820.
A higher appetite for risk is weighing on the USD
In the absence of any relevant macroeconomic data, dollar weakness seems the main reason behind the surprising euro recovery. The safe haven greenback is losing ground across the board with investors' sentiment boosted after the newly appointed British Finance Minister announced the U-turn on the mini-Budget Tax cuts.
The US Dollar Index has depreciated about 0.8% in its largest reversal of the last two weeks, retreating from last week's highs at 113.70 to test the support area at 112.00 at the time of writing.
From a wider perspective, however, the pair remains quite far from October’s peak at parity levels. Eurozone’s economy has relevant challenges ahead, with inflation at historic levels on the back of higher energy prices and with no solution in sight during the Ukrainian war, which are likely to hinder a sustained euro recovery.
EUR/USD seen retesting 0.9540 – ING
Currency analysts at ING are skeptical about the current EUR/USD rally, and see the pair resuming its downtrend: “The euro should remain heavily impacted by sterling’s swings in the near term, and here the correlation appears to be stronger on the downside i.e. the spillover from another sell-off in gilts would likely have an asymmetrically larger impact on the euro than the positive implications of a recovery in UK sentiment (…) “We still think that EUR/USD will test the 0.9540 September lows in the near-term, and extend a drop below that level by year-end.”
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.