Investing.com – The US dollar lost positions in early trading Monday in Europe, although it remained close to recent one-week highs, as the potential for prolonged monetary tightening cycles weighing on global growth, as well as political turmoil ending the holiday Weekend in Russia, risk aversion fuel.
By 08:00 AM ET (0800 GMT), the euro, which tracks the currency against a basket of six other major currencies, was down 0.2% at 102.358, after rising more than 0.5% last week, the first in a month. almost.
Uncertainty about the Russian political chaos
The dollar got an immediate boost over the weekend from news of an uprising in Russia by Wagner’s group of mercenaries, though it was dashed with the subsequent agreement with President Vladimir Putin halting the march on Moscow.
The situation remains volatile and it remains to be seen how Putin responds to this stark challenge to his authority, which creates significant uncertainty.
The greenback was already in demand ahead of the Russian crisis over the weekend, with several major central banks, including the US, signaling more interest rate hikes this year in a bid to combat still-high inflation.
“What likely provided support for the dollar was the aggressive message promoted by Federal Reserve Chairman Jerome Powell during his two days of appearance before Congress,” ING (AS:) analysts explained in a note. “Powell appears to have added more weight to the near-term outlook for further rate hikes.”
The Euro barely rose ahead of the German IFO report
The pair rose to 1.0907, recovering somewhat from last week’s losses, when the single currency fell to its lowest level in a week after data from the eurozone showed that business growth virtually halted in June.
It will follow, which is expected to show the continued deterioration of business confidence in the eurozone’s largest economy.
The British pound is recovering after last week’s fall.
The pair is aiming for a 0.2% rally to 1.2738, reversing part of last week’s 0.8% decline, after it surprisingly announced a 50 basis point interest rate hike, sparking fears of a recession in the UK as it tries to rein in inflation. .
The results of the latest report will be released later in the day and are expected to show that confidence in the UK retail sector remains fragile.
Elsewhere, the risk-sensitive pair was broadly unchanged at 0.6683, while the yen was down 0.1% at 143.38, with the yen under significant pressure given the contrast between the Bank of Japan’s ultra-cautious stance and the aggressiveness of central banks. in another place.
The pair is set to rise 0.5% to 7.2153 as Chinese markets resume activity after the bridge, and traders generally expect more support from Beijing to spur the faltering economic recovery in the US.
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