NEW YORK: The euro advanced to a three-month high against the dollar on Monday, as bearish bets on the US currency remained solid after the Federal Reserve signalled last week it could soon cut interest rates.
The euro stretched its rally last week, when it added 1.4 per cent, and rose about 0.15 per cent to $1.1386 in early Asian trade, its highest since March 22. It last traded at $1.1381, report agencies.The dollar index versus a basket of six major currencies was a shade lower at 96.107, having struck 96.093 on Friday, its lowest since March 21, after the Fed last week opened the door for a potential rate cut as early as next month.
That weighed on the dollar and in turn reinvigorated its counterparts such as the euro, which has had troubles of its own including Italy's debt problem and the possibility of the European Central Bank having to ease policy.
"It is true that the ECB may have to ease policy especially with the Fed having shifted to an easing bias," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
"But the ECB already employs a negative interest rate policy and does not have much further room to ease even if they wanted to, unlike the Fed.