Dollar Remains Strong; Euro Affected With Growing Covid Concerns

On Monday, the U.S dollar remained strong and traded close to a 16-month high against the euro which has been impacted by the rising covid tensions across the region. Many countries are considering reintroducing strict lockdowns due to curb rising cases.

The dollar kept a strong position against the Australian and Canadian dollars with added pressure from crude oil declines. The Federal Reserve officials said on Friday that stimulus tapering should be done sooner than expected to boost economic recovery, causing the dollar to remain bullish. Asset tapering could also hint towards interest rate hikes by the middle of next year.

The dollar stayed strong at 96.148 after reaching last week’s 16-month high of 96.266. On the other hand, the Euro fell to $1.12705. Chris Weston from Pepperstone in Melbourne said, “EUR/USD has been in a free fall and will likely get the lion’s share of attention from clients looking for a play on growing restrictions and tensions across Europe. For momentum, trend followers and tactical traders, short EUR remains attractive here.” The USD gained 0.1% against the Japanese yen, trading at 114.15 yen per dollar.

Worried about Europe’s slowing economy would also affect crude oil which has been on a downfall. The USD gained 0.10% against the Canadian dollar whereas the Australian dollar gained 0.22% with support from increased prices of iron ore. Joseph Capurso, strategist at the Commonwealth Bank of Australia said, “We expect AUD to remain heavy in the near-term and a sip to $0.70 is possible, with a slowing Chinese economy and the Reserve Bank of Australia’s dovish policy stance dragging on the currency.

He further said, “Meanwhile, USD can extent its recent rally this week and set a fresh 2021 high. Another round of strong U.S inflation can further propel market pricing of FOMC rate hikes and the USD.”

©Photo: Sadik Demiroz