On Friday, the EUR/USD currency pair shot back above the 1.1650 level. This rally was powered by the risk appetite going from negative to positive in global markets. This uptrend is an important change since the pair continues to build on its daily advance in the American trading hours.
Several factors contributed to this surge. Tremendous bullish momentum has shifted market sentiment. At the same time, U.S. consumer inflation expectations have retreated, undermining the U.S. Dollar and providing the euro with additional upward momentum. The drop in inflation expectations is the most glaring detail, as it proves negative for the dollar’s strength entering the weekend.
Additionally, the University of Michigan’s Consumer Sentiment Index showed a record decline in the 1-year Consumer Inflation Expectations component. This dramatic reversal has been a major anchor on the U.S. Dollar, allowing the EUR/USD pair the space it needs to ramp higher.
“EUR/USD climbs above 1.1650 area on improving risk mood” – www.fxstreet.com/currencies/eurusd
As the American session went on, the bullish momentum built up around EUR/USD began to feed…Market participants are more convinced than ever, analysts said, thanks to exogenous factors that are moving markets and impacting currency cross currents. This increased risk appetite among traders is an expression of increased confidence in European markets relative to their U.S. counterparts.