Currencies Overview: Euro Falling to Lowest Level in Three Weeks

The dollar rose Monday, January 11th, with the rise in US Treasury yields and expectations of more fiscal stimulus, which pushed the US currency to rise against its competitors, while the euro fell to its lowest level in three weeks.

US President-elect Joe Biden, who takes office on January 20 with the Democrats controlling the House of Congress, promised to spend “trillions” of dollars on additional aid for pandemic aid.

Usually, additional spending plans cause investors to worry about rising inflation and its harmful effect on the US dollar with the weak economy, but the greenback has gained support in the past few weeks thanks to high US bond yields.

The euro fell to $1.2151, its lowest level since December 21, and down about 2% from its high last week of $1.2349.

The nominal yield of the US benchmark 10-year bond is more than 20 basis points higher to 1.1187% this year, which helped the dollar rise to a one-month high of 104.20 against the Japanese yen.

The dollar index has lost about 12% since it reached a three-year peak in March, but it is more than 1.3% higher than the nearly three-year low it hit last week. The index rose 0.37% to 90.638 on Monday.

The Australian dollar fell 1.1% to $ 0.7679, as it was unaffected by the strong domestic retail sales performance for another month.

The dollar also increased 0.11% to 6.4820 yuan after weak factory gate delivery prices in China.