LONDON (Reuters) – Tuesday was the first time in a month that the dollar fell to a new one-month low. The euro continued to rise, and a widespread drop in stock prices didn’t make the dollar more attractive as a safe haven.
The dollar fell 0.3% against a basket of its rivals to 101.79, its lowest level since April 26.
The euro gained ground after European Central Bank President Christine Lagarde stated that negative interest rates, which have been a feature of the eurozone for eight years, will most likely be phased out by the end of the summer.
In early London trading, the single currency went up 0.4% to $1.0729 as traders cut their short positions after Lagarde said that interest rates would be positive by the end of the third quarter.
“Many observers will continue to view the ECB as being too hesitant, “Commerzbank (ETR:CBKG) strategists wrote in a note. “However, the fact that a lift-off is now very likely to occur in July and that the ECB appears willing to hike rates further after that is positive for the euro.”
Earlier this month, the euro fell to a January 2017 low of $1.0349 but has since rebounded by 3.6% in seven trading sessions.
The risk-sensitive Australian dollar fell by 0.41 percent to $0.70815, and the New Zealand dollar fell by 0.46 percent to $0.6438, a day before the Reserve Bank of New Zealand was widely expected to raise interest rates.
Futures on US equities fell by more than 2%, indicating a stock market decline.
Currency market volatility remained stable at 9.6 percent, close to a two-year high of more than 10.5 percent earlier this month.
