Euro off 6-month highs, dollar steady in subdued trade
The euro pulled away from six month highs on Tuesday but remained supported by the improving outlook for the euro area, while the dollar was steady against a basket of the other major currencies.
EUR/USD was at 1.0917 after hitting 1.1021 on Monday’s its highest level since early November in the aftermath of Emmanuel Macron’s convincing win in the French presidential election.
The euro fell back amid profit taking but demand for the single currency continued to be underpinned by indications of an improving economic outlook in Europe and as worries over political risk faded.
Recent economic reports have indicated that the economic recovery in the euro area is gathering momentum, which is expected to give the European Central Bank more room to tighten monetary policy before the end of the year.
ECB board member Yves Mersch said on Monday that the central bank will soon be able to adopt a more optimistic tone on the euro-area economy, a possible first step in winding down stimulus.
The euro was at seven-month highs against the traditional safe haven Swiss franc, with EUR/CHF at 1.0920.
The euro was also higher against the yen, with EUR/JPY at 124.16, not far from Monday’s one-year peaks of 124.61.
The dollar hit fresh seven-week highs against the yen, with USD/JPY rising 0.39% to 113.68 amid expectations for Federal Reserve rate hike in June.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was a touch higher at 99.09.
Sterling edged higher, with GBP/USD inching up 0.09% to 1.2949.
Meanwhile, the Australian dollar slumped to four-month lows pressured lower by disappointing domestic retail sales data and recent weakness in commodity prices.
AUD/USD touched lows of 0.7336 and was last at 0.7354, off 0.45% for the day.