Support for risk related currencies is dominating the FX narrative in the early part of Wednesday’s European session, with the euro the star performer in gaining almost 0.5% versus the dollar. The single currency’s resurgence is remarkable, considering that Italy had its credit rating downgraded by Fitch yesterday and now sits just one notch above junk. Optimism triggered by several countries entering a less stringent phase of their lockdowns and further enhanced by a recovery in oil prices is driving the resurgence of risk appetite in the markets, appearing to indicate that investors also feel positively towards the upcoming Fed and ECB announcements.
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