The European Single Currency, euro, on Monday, April 23, crashed by half a percent to a 2-1/2 week low of $1.2226, not helped by a survey showing business activity in April stabilizing across the euro zone.
The euro had enjoyed a strong rally until February before finding itself stuck in a trading range with the dollar after the European Central Bank cautioned investors expecting it to raise rates sooner than expected.
Not all analysts are convinced the greenback can sustainably strengthen much from here, and many still back the euro to gain once there is clarity about euro zone monetary policy.
“There is a little bit of a notion that the ECB could sound a bit more cautious. We don’t think so. We think that the ECB will keep its policy normalisation stable,” Credit Agricole FX strategist Manuel Oliveri said. He predicted the euro-dollar exchange rate would remain stuck in its recent range and noted that recent positioning data suggested investors were not bullish on the dollar.
The ECB holds its monetary policy meeting on Thursday.
The rise in bond yields also weakened Asian emerging market currencies versus the dollar, with the Chinese yuan and Korean won down and the Indonesian rupiah hitting a two-year low of 13,895 per dollar.
The Australian dollar skidded to its weakest since Dec. 14, falling to as low as $0.7634 before recovering slightly to $0.7643, while sterling and the Canadian and New Zealand dollars also dropped.
The yen slumped 0.6 percent to 108.28 yen per dollar, its weakest since Feb. 13.
Easing concerns over global political risks weighed on the Japanese currency, market participants said, as the yen tends to attract demand in times of market uncertainty and weaken when confidence returns.
North Korea said on Saturday it would immediately suspend nuclear and missile tests, scrap its nuclear test site and pursue economic growth and peace instead. It made these comments ahead of planned summits with South Korea and the United States.
U.S. Treasury Secretary Steven Mnuchin said he may travel to China, a move that could ease tensions between the world’s two largest economies, Reuters reports.
