The dollar dropped to its lowest in nearly seven weeks during the Asian session, while the euro rallied, as investors grew more optimistic about the pace of vaccine rollout in Europe and U.S. Treasury yields remained below their March spikes.
The dollar has fallen so far in April as U.S. bond yields retreated from the 14-month highs touched last month. The moves are a reverse of what happened in the first quarter of the year, when the dollar strengthened as U.S. Treasury yields rose, offering higher returns on the greenback.
At 0728 GMT, the dollar index was down 0.1% at 90.952, having hit a low of 90.877 during the Asian session .
The euro was up 0.3% at $1.2065 – its highest in nearly seven weeks – after having passed the key $1.20 in the previous session.
Commerzbank strategist You-Na Park-Heger wrote in a note to clients that the recent fall in the dollar is due to the U.S. Federal Reserve’s reassuring the market that it will not end its monetary stimulus anytime soon, while an improving vaccine situation in Europe is supporting the euro. But she said that the situation could rapidly change.
“The economic recovery in the U.S. might drive up inflation expectations further, fuelling rate hike speculation. The news situation in the euro zone in connection with corona might change again as uncertainty remains high,” she said.
Some analysts said the support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of COVID-19 vaccine by BioNTech (22UAy.DE) and Pfizer (PFE.N). read more
Versus the yen, the dollar broke the 108 level overnight, before reversing course, up 0.3% on the day at 108.450 .
“USD/JPY is one G10 currency pair which has still not fully retraced the move higher from March when it started the month trading closer to the 106.00-level,” Lee Hardman, currency analyst at MUFG, said in a note to clients…..read more
Source: Reuters
