Foreign exchange: Dollar strength weighs on the euro

NEW YORK (dpa-AFX) – The euro remained under pressure in US trading on Monday. The common currency thus continued the price losses of the past trading days. Most recently, the common currency cost 0.9714 US dollars, slightly less than in the early European business. The European Central Bank (ECB) had set the reference rate at 0.9697 (Friday: 0.9797) dollars. The dollar thus cost 1.0313 (1.0207) euros.

The US dollar benefited from the uncertainty on the financial markets. At the start of the week, an escalation in the Ukraine war had given rise to new concerns. After the explosions on the Crimean bridge, which is strategic for Russia, rocket attacks were reported in numerous Ukrainian cities and in the capital Kyiv. Investors pushed into the safe investment haven of the US dollar, while the euro came under pressure in return.

According to market observers, recent data from US job market still having an effect on the foreign exchange market. On Friday, a robust US job market report increased speculation that interest rates in the US would continue to rise sharply and gave the dollar a boost. The comparatively low unemployment gives the US central bank the necessary leeway to continue the fight against high inflation with large interest rate hikes.

Evidence of significant rate hikes in the euro zone could not give the euro a boost. The Dutch ECB Council member Klaas Knot had spoken out in favor of sharp interest rate hikes in the fight against high inflation. At least two more “significant rate hikes” are needed, said the President of the Dutch central bank in a speech in Amsterdam

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