Likely Policy Divergence Key To Dollar Direction

For the second consecutive day, the US Dollar has surged, especially against the common currency Euro, amid growing speculation of monetary policy divergence. The Euro remains under pressure generally after last week’s attacks in Paris, but markets are focusing on inflation data from the US.

As reported at 9:52 am (GMT) in London, the EUR/USD was trading at $1.0667, down 0.18%; the pair has ranged from $1.0643 to $1.0692 in today’s trading. The EUR/GBP was also loer at 0.7018 pence, a loss of 0.16%; the trading band range for the day was relatively tight with 0.7006 pence at the low end and 0.7034 pence at the high end. The US Dollar Index was higher at 99.510 .DXY, a gain of 0.07%. Earlier in today’s session the index hit a 7-month peak at 99.655 .DXY, besting last week’s peak after the strong labor report on Friday.

ZEW No Help for Euro

The latest economic data from the Eurozone, specifically the ZEW report which spotlights business sentiment in Germany, came in below expectations for the current assessment. However, the outlook handily beat expectations with a reading of 10.4 against expectations of 5.5. The overall current assessment of the Eurozone area was disappointing with a reading of 28.3 versus expectations of 32.5.