The euro hit a 3 week high to $1.24 on Tuesday as concerns of further strikes by the U.S. receded.
The euro rallied 0.3 percent to $1.2412, its highest since March 28. In morning trading the EUR/USD remained unchanged at 1.2330, but in afternoon trading it rallied sharply.
Against the AUD, CAD and NZD the euro gained, ending in second place to the GBP, which gained in strength, hitting its highest level since June 2016.
Against a basket of six major currencies the dollar slipped 0.2 percent.
The fall in the dollar included other currencies not only sterling but also a number of Asian currencies and the Korean Won.
FX strategist at Societe Generale, Alvin Tan said that risk sentiment looks like it is reviving with the weakness in the dollar. Supporting the euro, Asian currencies and the sterling.
He went on to say that although there still is trade issues, they seemed to have faded and Donald Trump has not been tweeting for a number of days.
Trump Meets With Shinzo Abe
U.S. President Donald Trump is set to meet with Japanese Prime Minister Shinzo Abe in the next two days.
Market participants suspect that pressure will be put on Japan by the U.S. after a report by the U.S. Treasury decided to keep Japan on a monitoring list for manipulation.
A two way free trade agreement which will include monetary and currency policies together with market access will undoubtedly be on the table by the U.S.
Against the yen the dollar fell from a high of 107.78 yen to 106.96 yen.
Investors are upbeat that the Bank of England with raise interest rates next month, which helped push the sterling to its highest level since June 2016. Also supporting the sterling was that the talks around Brexit have been positive, which has encouraged traders on their positions.
China and Russia
China and Russia were targeted by U.S. Donald Trump with comments this week that they were both trying to devalue their currencies, (which weighed on the greenbuck).
U.S. sanctions against Russia, is seen as the cause of the slump in the rouble.
MUFG analysts said that they believe that President Trump’s agenda might be to talk down the dollar so that the U.S. Import bill will shrink. This could ‘wet’ the appetite of investors to hedge their dollar exposures.
Official data released on Tuesday showed that China’s economy rose slightly above forecasts and in the first quarter of 2018 grew 6.8 percent.
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