The European Single Currency, Euro, on Friday, February 9, gained against the dollar but the single currency was still headed for its worst weekly performance since October after the global stock market sell-off squeezed investors betting against the greenback out of their positions.
The euro was up 0.2 percent at $1.227, having lost 1.47 percent against the dollar this week. So far this year, the euro remains 2.28 percent higher. It hit a three-year high of $1.2538 in late January.
Betting on a weaker dollar versus the euro has been one of the most popular trades this year, with a resurgent European economy fueling expectations the European Central Bank will shrink its balance sheet sooner than expected.
Stephen Gallo, European Head of FX Strategy at BMO Capital Markets said the sell-off “in equity markets and risk assets has led to a healthy correction in FX markets, in the short dollar positions getting squeezed.”
Gallo said that unless there was a fundamental shift in the health of the global economy, which this week’s downturn in equity markets did not imply, the dollar remained in a ”multi-year downward trend.
“Don’t let this take your eye off the longer-term picture of dollar weakness,” he said.
Meanwhile, the Swiss franc, another currency investors turn to as a perceived safe haven, also hit a four-month high against the euro at 1.146 francs before falling back to trade at 1.1518, down 0.5 percent on the day.
