The US Dollar Approaching Annual Peaks, ECB In Sight

The dollar stood within shouting distance of new record annual peaks on Wednesday, as fears of rising covid-19 infections capped gains from interest rate hike expectations. Meanwhile, investors are waiting to get signs from the European Central Bank on their next move.

On Tuesday, the euro touched its lowest level since April, hitting $1.1772 in Asian trading, not far from this year’s low at $1.1704. However, the single currency could find support if the European Central Bank does not meet expectations for adjustments in the direction of monetary easing at Thursday’s meeting.

“The result is that the ECB’s monetary policy will remain very accommodative for a longer period, which will weaken the euro,” said Kim Mundy, an analyst at the Commonwealth Bank of Australia.

The dollar index rose 0.1 percent to 93.033 and may test March’s peak of 93.439, according to Sean Callow, an analyst at Westpac in Sydney, as the currency appears to benefit from risk aversion when investors are concerned and from expectations of a rate hike when they are not reassured.

The latest price of the Japanese yen was 109.87 for the dollar and 129.237 for the euro.

The British pound hit $1.3616, below the 20-day and 200-day moving averages and right above the five-month low set on Tuesday.

It reversed Tuesday’s losses in cryptocurrencies, with Bitcoin breaking its lowest level in a month and back above $30,000.