Euro gains against the Dollar amid mixed economic signals
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The EUR/USD pair rose to 1.0707 on Wednesday, driven by increased local and the belief that the currency was significantly oversold against the US dollar. Sales of new homes in March showed a robust increase of 8.8% month-on-month, climbing to 693,000 from February’s 637,000, surpassing expectations. The year-on-year comparison also reflected strength with an 8.3% increase. The weighted average price of a sold house in the US rose to USD 524.8 thousand from USD 488.6 thousand in February, pointing to a market that is still vibrant despite elevated interest rates. Continued activity in the housing market is likely to sustain inflationary pressures in the US for an extended period. As long as the Fed keeps interest rates at the current peak of 5.5% per annum, the EUR/USD will likely retain its strength. Any current weakening of the dollar is seen as a temporary adjustment rather than a trend reversal.
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