The euro shows no sign of slowing its rally against the dollar, as investor confidence continues to improve

The dollar remained under pressure yesterday as an increase in America’s industrial output last month encouraged investors to sell the US currency.

• US economic data revealed that industrial output rose in August and the current-account deficit shrunk, bringing the figure under $100 billion, enabling the euro to advance further.
  
• The dollar traded at its lowest level this year as another report also showed America’s consumer prices climbed last month, encouraging investors to pursue higher-yielding currencies.
  
• Additionally, rising risk appetite, spurred by the words of Ben Bernanke, boosted global stocks, stemming haven demand and pushing the euro to a close of 1.4708.
  
• The single currency has now gained over 2.5% riding on improved investor confidence and expectations that the US rates are likely to stay rock bottom for some time.
  
• Analysts have warned that this upward trend is now extremely stretched and that the rally could soon run out of steam, with the price possibly in for a technical correction.