However, the dollar started to slide around 0800 GMT after European stock indices, which had opened lower, gradually strengthened.
The US Federal Reserve has signaled a rate hike of 75 basis points at its meeting on July 26-27but last week’s data showing inflation reached 9.1% year-on-year in June raises the possibility of a hike to 100 basis points this year.
At 1036 GMT, the dollar index was down 0.2% at $106.49, while the euro was up 0.1% at $1.02195.
Neil Jones, head of foreign exchange at Mizuho, said the boost to the euro may have come from traders hedging their short euro positions following the European Central Bank’s decision last week to raise rates for the first time since 2011.
The euro it was boosted to a two-week high last week after the rate hike, but then fell after disappointing business activity data from France and Germany.
Currency analysts at ING said moves in the euro suggest expectations around the European Central Bank’s policy plans will be driven more by data going forward, highlighting euro zone inflation data to be released on Thursday. and on Friday.
“We think 1.0200 could be an anchor for EUR/USD for the rest of the summer, but retesting parity is a tangible risk in the current high volatility environment,” ING said.
A survey on Sunday showed that 16% of German industrial companies were cutting production in reaction to rising energy prices. Against the Japanese currency, the dollar was up 0.2% at 136.375 yen.
By Elizabeth Howcroft of Reuters
Source: Ambito
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