The safe-haven US dollar is trading against the euro this morning at a level close to its highest level in 16 months, amid growing concern over the impact of the surge in Covid-19 infections in Europe With Austria reimposing full lockdown and Germany planning to do the same, Europe has once again become the epicenter of the pandemic, accounting for half of the world’s cases and deaths.
The greenback was near its highest level since early October against the riskier Australian and Canadian dollars, with commodity-linked currencies also under pressure from the crash in crude oil.
The dollar received additional support thanks to positive comments from Federal Reserve officials Richard Clarida and Christopher Waller, who on Friday suggested that a faster pace of stimulus reduction might be appropriate amid a recovery context. fast and high inflation.
An earlier end to the cutbacks in stimulus raises the possibility of an earlier rise in interest rates. Currently, the market is predicting that the Federal Open Market Committee (FOMC) will start raising rates by the middle of next year.
The Australian dollar remains penalized in the short term due to the slowdown in the Chinese economy and the dovish attitude of the Reserve Bank of Australia which weighs on the currency.
This week we will have to follow the decision of the National Bank of New Zealand with operators expecting a rate hike of 50 basis points.
EURO TESTS A SUPPORT RIGHT OF 127.95
The euro against the yen touched support at 127.94 which resulted in profit taking and a rebound. However, the trend remains bearish below the descending 13 and 34 period moving averages. A new test of the support line is therefore possible. Below this level, prices could continue towards the support and psychological level of 125.00.
To ward off this selling pressure, the price rally must exceed the 130.00 high point level of Friday’s long negative candlestick
Evolution of the euro against the yen in daily data: