The dollar index hit its six-week high of 78.743 against the euro with six-week depression of $1.3560 on World Foreign Exchange Tuesday.
The dollar gets stronger and better for six weeks now compared with euro, which has a consistent downfall on same period. On Monday, the ten-year US Treasury bonds climbed 17 basis points and extends its gains on a three-month high near 2.97 percent, supporting the US currency a broader lift.
On the other hand, despite euro’s slight recovery from its losses to stand at $1.3610 up to 0.2 percent from late US trade on Monday, traders believed that euro will struggle to surpass dollar’s strength as the year-end approaches. Japanese trust bank trader said that euro and Australian dollar are likely to be sold while the dollar is bought back.
Traders said that euro bounced back after declining below its 55-day moving average. They said that euro was supported by talk of buying on dips by Asian traders. They may have bought the euro following the decline stalled right near those support levels. It was a clear breach of support that can open the way for a further decline in the euro. They also said that fiscal troubles between Ireland and Portugal and meetings of European finance officials on Tuesday and Wednesday this week are adding to the worries of the market players.
Meanwhile, US Treasury bonds were sold when seasonal position tends to unwind and the dollar has been bought back. US currency has a close linkage to US yield and their gap with rates on other currencies seemed to support the greenback by making dollar investments more appealing.
The yield, on the other hand, has improved in the dollar’s favor, as a result of the sell-off in US Treasuries. The dollar steadied against the yen at 83.08 yen, floating near a six-week high of 83.28 yen marked on trading platform EBS on Monday.
