Impetus of US Dollar Buying Lifts Currency to 12-Year Peak

The momentum of US dollar buying boosted the currency to a new 12-year peak versus the single currency surmounting below par US inflation and outlook of consumer sentiment.

Analysts say there seems to be positioning earlier than the US Central Bank’s fiscal policy meeting this coming week which was also one of the reasons for the dollar’s rise.

The euro dropped to $1.04625 fell (1.60 percent) on the EBS trading platform.

Meanwhile, Some FOREX strategists in New York observed that the dollar’s upward climb is not sustained by front-end profits. Producer prices dropped 0.6 percent in February which indicates subdued inflation.

Likewise, the consumer sentiment index of the University of Michigan declined even if inflation prospects increased for a second successive month since September.

The QE program of the European Central Bank was designed to accelerate borrowing and investments. This strategy stands out against that of the Federal Reserve which is to begin increasing cash rates in the middle of this year to enhance the US currency's yield advantage.

The dollar-buying thrust has overcome increasing European yields according to currency experts.

For instance, a break in Euro bond buying pushed yields to unprecedented lows and even negative levels.

The pound sterling decreased one percent to another five-year low of $1.4697. Bank of England Governor Mark Carney said there was no hurry in interest rates.