The dollar tumbled to an almost two-year low against the euro on Monday on concerns about a growing number of coronavirus cases in the United States, and before the Federal Reserve this week is expected to confirm its commitment to rock bottom rates.
“It seems like we’re seeing the dollar lose its crown,” said Edward Moya, senior market analyst at OANDA in New York. “There are high expectations you’re going to see the Fed continue to signal that they’re prepared to do more at a longer run, and the U.S. economic recovery is not going to be anywhere near as smooth as what is unfolding in Europe.”
Florida on Sunday became the second state after California to overtake New York, the worst-hit state at the start of the U.S. novel coronavirus outbreak, according to a Reuters tally.
U.S. Treasury Secretary Steve Mnuchin said on Sunday Republican coronavirus relief legislation will be made public on Monday and that he believes the party can move quickly with Democrats to hammer out their differences.
The Fed is expected to reiterate that it will keep rates near zero for years to come when it concludes its two-day meeting on Wednesday.
The euro was last up 0.87% at $1.1755, after earlier reaching $1.1763, the highest since September 2018.
The single currency may extend gains to $1.20 if the region is able to contain any resurgences of the coronavirus, Moya said.
“I think you’re going to see a steady amount of investment and market positioning going back to Europe, and that will provide some room for much more weakness here with the U.S. dollar,” he said.
The dollar index fell 0.76% to 93.64. It earlier dipped to 93.60, the lowest since June 2018.
The safe haven Japanese yen also gained on concerns about deteriorating U.S.-China relations. Tensions rose after Washington last week ordered China’s consulate in Houston to close, prompting Beijing to shutter the U.S. consulate in Chengdu.
The dollar fell 0.82% to 105.25 yen, the weakest since March 16.
– Reuters.