Dollar drops against the euro

Published: 20 Mar at 10 AM Tags: Euro, Dollar,

The euro has risen against the US dollar and looks likely to hit an 18-month high by the end of the week. The recovery of the single currency has been given a boost by a dollar sell-off after the Federal Reserve indicated it was being cautious about any imminent hike in interest rates.

The greenback is down against a raft of its major rivals following a downgrading by the Fed of its expectations for inflation and economic growth. Borrowing costs are now unlikely to increase in June as had previously been mooted.

The dollar index stands at 98.952 after dropping as low as 96.628. The index is a measure of how the greenback is faring against a basket of other currencies.

The euro was last up 0.2 per cent against its US rival at $1.0683. However, many analysts are expecting the downtrend in the single currency to continue. HSBC, the British banking giant, was the only major financial institution to reverse its forecast for the euro by predicting that the euro will hit $1.20 in 2017.

The dollar rose 0.1 per cent against the yen to 120.88 yen. Pressure is likely to remain on the Japanese currency as the Bank of Japan makes no changes to its bond buying programme.