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Dollar Rides Euro Woes to Fresh 6-Month Highs

5/30/2018, 10:53:03 AMBasics of Trading
Dollar Rides Euro Woes to Fresh 6-Month Highs

The U.S. dollar rose to a fresh sixth-month high against its rivals as a rout of the euro prompted traders to buy the greenback amid rising Eurozone political uncertainty.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.46% to 94.79.

EUR/USD fell 0.57% to $1.1560 after paring some losses following its slump to a 10-month low of $1.1511 earlier in the session as political uncertainty in Italy and Spain weighed.

Italy faces the prospect of fresh elections, which could deliver a deeply Eurosceptic government, threatening the future of the Eurozone, after proposed prime minister Giuseppe Conte abandoned his mandate to form a government on May 27.

As well as Italian political uncertainty, sentiment on the euro was also soured by fears of elections in Spain as the principal opposition party tabled a motion of no confidence last week against the government in the wake of a large corruption scandal.

“Although it remains to be seen if the motion will pass, political noise could interfere with policymaking, which has already been slow this year,” Action Economics said in its June 2018 Consensus Forecast. .

Mixed U.S. economic data, meanwhile, did little to derail the strength of the greenback.

The Conference Board’s consumer confidence gauge rose to 128.0 in May from 125.6 in April, missing economists’ forecast for a reading of 128.2.

The S&P/Case-Shiller 20-city home price index rose a seasonally adjusted 1% in March, and 6.8% for the year.

The duo of reports come ahead of U.S. economic growth data, or GDP, slated for Wednesday.

GBP/USD fell 0.46% to $1.3249, while USD/CAD rose 0.22% to C$1.3022 as falling oil prices continued to support the pair.

USD/JPY fell 0.70% as rising geopolitical uncertainty attracted demand for safe-haven yen.