Dollar Rebounds Against Euro as ECB to Ponder Soft Inflation

The dollar hit a more than one-week high against a basket of other major currencies on Monday, helped by a pullback in the euro as investors took profits after the common currency’s recent rally.

The dollar index, which measures the greenback against six rival currencies, was up 0.37 percent at 92.287.

The euro slipped 0.47 percent to $1.1972. It had hit a nearly four-month high of $1.2089 on Thursday.

“The euro got a little bit over its skies when it traded over $1.20,” said Brad Bechtel, managing director FX at Jefferies in New York.

“The market is very stretched on the position,” Bechtel said. “It’s a little bit of profit-taking and some healthy correction going on the euro’s side, which is driving some of the dollar trades.”

The euro, which has rallied in recent weeks on expectations for a shift in European Central Bank monetary policy this year, suffered a little after a cooler-than-expected reading of the euro zone’s December consumer price index on Friday.

Lackluster inflation pressure in Europe has been accompanied by a strengthening economic recovery across the continent and solid economic growth in China and the United States, fueling risk appetite.

via Kitco

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the nagribahFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.