Investing.com – The dollar pushed higher in early European trading Thursday, climbing to a four-month high against the euro as the third Covid wave and slow vaccine rollout in Europe weigh on the single currency.
At 4 AM ET (0800 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 92.712, just below a four-month high of 92.692 reached overnight.
EUR/USD was down 0.1% at 1.1805, having traded at a new four-month low of 1.1803 earlier, with the single currency suffering as a consequence of the region’s extended lockdowns and delayed vaccine rollouts.
A number of European countries, such as Germany, France and Italy, have recently extended their mobility restrictions following a sharp pickup in Covid-19 cases.
Indeed, the French government is ready to take tougher measures if current restrictions to limit the spread of the coronavirus fail, Health Minister Olivier Veran said on Wednesday.
“With the extension of European lockdowns delaying any EZ [eurozone] economic recovery, EUR/USD has broken below the important 200-day moving average support level of 1.1863. Technically, this keeps EUR/USD vulnerable,” said ING analysts, in a research note.
On Wednesday, U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell expressed their confidence in the U.S. recovery during a second day of testimony to Congress.
This confidence surrounding the U.S. economic rebound is in contrast to large parts of the developed and developing world, who are struggling to reopen their economies as they combat rising numbers of Covid cases.
“Factors behind USD strength have moved away from concerns about the reflationary impact on US Treasurys to concerns about global growth expectations,” added ING.
Elsewhere, USD/TRY fell 0.1% to 7.9170, with the lira benefitting slightly from the state news agency Anadolu reporting that Turkey’s new central bank governor has promised to stick to the single interest-rate framework adopted by his predecessor, citing a meeting between the monetary authority and commercial lenders on Wednesday.
This follows Turkish President Recep Tayyip Erdogan sacking his hawkish central bank chief, Naci Agbul at the weekend.
USD/CHF rose 0.1% to 0.9365 and EUR/CHF climbed 0.1% to 1.1061 ahead of the latest interest rate decision by the Swiss National Bank. The central bank is likely to keep its benchmark rate at a record low of -0.75%, but SNB President Thomas Jordan will probably repeat his willingness to use interventions to try and prevent the franc from appreciating too quickly.
Other central banks set to meet Thursday include the South African Reserve Bank and the Bank of Mexico. Emerging markets have been feeling the brunt of pressure from the rising U.S. dollar, as witnessed by both the Russian and Turkish central banks hiking rates recently.
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