The euro broke above
$1.10 on Monday as traders trimmed bets against the euro, hoping to
avoid the type of brutal short squeeze that followed the European
Central Bank’s December meeting when the central bank meets again later
this week.
A breakdown in the
historic correlation between the euro-dollar exchange rate and the
spread between Treasury and German bunds suggested that the euro’s
strength on Monday was largely due to shifts in short-term positioning,
said Doug Borthwick, head of currency trading at Chapdelaine & Co.
Treasury yields have
risen Monday while those on eurozone and Japanese debt have declined.
Typically, this trading pattern would result in a stronger dollar.
The shared currency
recently traded at $1.1010, little-changed from its level late Friday in
New York, but off a session low of $1.0935 reached early in the day.
ECB President Mario
Draghi has repeatedly hinted that the central bank would again expand
its easing measures at its March meeting, which is set for Thursday.
Meanwhile, the dollar
edged lower against the yen Monday, retreating back below the ¥114 level
after pushing higher for most of last week.
The ICE U.S. Dollar
index a measure of the currency’s strength against a basket of six rival
currencies, was down 0.2% at 97.1360.
Source: MarketWatch
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