admin The euro rises to a three-month high against the dollar on Monday 24 June as bearish bets on the U.S. currency remained solid on prospects of a near-term interest rate cut by the Federal Reserve.
The euro gained 0.2% to $1.1387, after touching its highest level since March 21. The difference between the yield on 10-year U.S. Treasuries and bunds was 234 basis points, compared with 244 basis points at the end of last year. Leveraged funds reduced their net short positions in the euro in the week ended June 18, latest CFTC data show.
The currency broke past resistance at the 233-day moving average of $1.1380, sending a bullish signal to investors who place trades based on technical strength. JPMorgan sees the euro ending the year at $1.15, while Nordea Abp is even more bullish.
The euro stretched its rally last week, up 1.4%, and advanced about 0.15% to $1.1386 in early Asian trade, its highest since March 22.
The dollar index versus a basket of six major currencies was a shade lower at 96.135, having struck 96.093 on Friday, its lowest since March 21, after the Fed last week opened the door for a potential rate cut as early as next month.
That weighed on the dollar and in turn reinvigorated its counterparts like the euro, which has had troubles of its own including Italy’s debt problem and the possibility of the European Central Bank having to ease policy.
“It is true that the ECB may have to ease policy especially with the Fed having shifted to an easing bias,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“But the ECB already employs a negative interest rate policy and does not have much further room to ease even if they wanted to, unlike the Fed. It is factors like these which have seemingly supported the euro.”
The dollar nudged up 0.1% to 107.400 yen after retreating to a near six-month low of 107.045 on Friday.
Currency traders will be watching the twists and turns at the G-20 meeting between the U.S. and China and its knock-on effects on trade with the euro zone. It has been almost a year since U.S. President Donald Trump and European Commission President Jean-Claude Juncker struck a truce on auto tariffs, but since then there has been little progress.
Source: Bloomberg
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