The dollar started trade in Asia on the defensive, after a volatile few days in the wake of the Federal Reserve’s dovish steer, which cast doubts on bullish positions in the greenback.
The dollar index eased 0.2 percent to 97.696 early on Monday, staying well clear of a 12-year peak of 100.390 set on March 13.
The index was nearing the post-Fed meeting trough of 96.628 hit last week when investors moved to price in a later start and a slower pace for future U.S rate rises.
The greenback stood at 120.01 yen, following Friday’s fall from 121.205. The euro climbed to $1.0838, pulling further away from a 12-year trough of $1.0457 plumbed last week.
“Our technical analyst highlights a series of bearish weekly key reversals for USD against EUR, GBP and CAD, suggesting USD will start this week on the back foot,” said Elsa Lignos, senior currency strategist at RBC Capital Markets.
“But as we still expect a June start to the Fed’s hiking cycle and look for further policy divergence from here, this correction should be an opportunity to re-establish USD longs.”
With the U.S. dollar looking weaker, commodity currencies were better bid. The Australian dollar traded near 78 U.S. cents, off a six-year trough of $0.7561 plumbed on March 11.
The New Zealand currency was flirting with 76 U.S. cents, having bounced from a recent low of $0.7177.
Traders expect no big moves in Asia amid a dearth of key economic data. Later, European Central Bank President Mario Draghi will address a European Parliament committee, with Greece and the progress of the ECB’s quantitative easing program sure to be high on the agenda.
Also in focus is Greek Prime Minister Alexis Tsipras’ first official visit to Berlin, where he will meet with Chancellor Angela Merkel.
At a European Union summit on Friday, Merkel said Greece would only receive fresh funds to ease a cash crunch once its creditors approve a comprehensive list of reforms it has promised but so far failed to produce.
With officials in Brussels, Berlin and the ECB now openly acknowledging the risk that Greece could leave the euro zone, this meeting will be closely watched for signs of a breakthrough or hardening of positions.
Source : reuters