The Euro skyrocketed to an eight-week high against the U.S. dollar on Monday. The new German survey was disappointing. However, it was overshadowed by investors’ expectations that the U.S. Federal Reserve will maintain its dovish stance at an upcoming policy meeting. The greenback tumbled down as such sentiment weighed on it heavily.
The dollar index plunged by 0.13% on Monday, reaching its lowest level since March 3. On the other hand, the Euro traded higher by 0.03% at $1.2105, despite giving up some of its earlier gains. The common currency hasn’t reached such high levels against the dollar since the beginning of March.
On Friday, the Euro posted its biggest daily gains since early February, boosted by positive data on European services and manufacturing activity.
However, problems with the supply of components in the industrial sector, along with the third wave of coronavirus infections, slowed recovery in Germany. According to the latest report, German business morale improved less-than-expected in April.
Ifo President Clemens Fuest noted that both the bottlenecks in intermediate products and the third wave of the pandemic are impeding Germany’s economic rebound.
What About the Other Currencies?
The onshore Chinese yuan climbed up to 6.4873 per dollar on Monday, almost reaching its six-week high. The Australian and New Zealand dollars also surged toward one-month highs.
The British pound traded 0.3% higher at $1.3924 today after gaining 0.3% in the previous session. Meanwhile, the dollar exchanged hands at 107.68 Japanese yen, near its lowest level since March 4.
The Federal Reserve’s next meeting ends on Wednesday. Investors don’t expect any major policy changes, but they will pay close attention to comments from Chairman Jerome Powell.
According to analysts, Powell will probably have to face questions over whether an improving labor market and surging COVID-19 vaccinations warrant a withdrawal of monetary easing.
On Monday, the Turkish lira tumbled down to as much as 8.48 against the dollar, nearing its record low of 8.58 reached in early November.