Dollar Up, Euro Falls as Number of European COVID-19 Cases Rise

  • Forex News
Dollar Up, Euro Falls as Number of European COVID-19 Cases Rise

By Gina Lee – The dollar was up on Monday morning in Asia, remaining near a 16-month high against the euro. Concerns over the rising numbers of COVID-19 cases in Europe also saw investors turn towards the safe-haven U.S. currency.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.15% to 96.175 by 10:37 PM ET (3:37 AM GMT). It remained near the 16-month high of 96.266 hit during the previous week.

The USD/JPY pair edged up 0.17% to 114.18.

The AUD/USD pair inched up 0.10% to 0.7242 while the NZD/USD pair was down 0.31% to 0.6988. The Reserve Bank of New Zealand will hand down its policy decision on Wednesday.

The USD/CNY pair inched down 0.03% to 6.3845 and the GBP/USD pair edged down 0.15% to 1.3432.

Bullish comments from U.S. Federal Reserve officials also boosted the U.S. currency. Fed Vice Chairman Richard Clarida and Governor Christopher Waller on Friday suggested that faster asset tapering could be appropriate as economic recovery quickens and inflation rises. This could also mean earlier interest rate hikes.

The euro was down 0.23% to $1.1274. "EUR-USD has been in 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," Pepperstone head of research Chris Weston said a note.

"For momentum, trend followers, and tactical traders, short EUR remains attractive here."

The surging numbers of COVID-19 cases triggered a full lockdown in Austria that begins Monday. German Health Minister Jens Spahn called the situation in the country a national emergency, adding that vaccinations alone will not reduce the numbers.

The riskier Australian dollar earlier slipped as low as $0.72285, near an Oct. 6 low. "We expect AUD to remain heavy in the near‑term, and a dip to $0.70 is possible," with the economic recovery in China slowing down and the Reserve Bank of Australia’s dovish policy stance dragging on the currency, Commonwealth Bank of Australia (OTC: CMWAY ) strategist Joseph Capurso said in a report.

Meanwhile, "USD can extend its recent rally this week and set a fresh 2021 high... another round of strong U.S. inflation can further propel market pricing of Fed rate hikes and the USD," the report added.

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