The U.S. dollar dropped to its lowest level in almost two weeks on Wednesday and the euro gained, with currency traders optimistic regarding peace talks in Ukraine, even amid warnings about the damage to Europe’s economy.
On Tuesday, the Russian Federation promised to reduce its attack on Kyiv. However, the United States said it had not seen “signs of real seriousness” from Russia in pursuing peace.
The U.S. currency extended its losses on Wednesday, hitting a new thirteen-day low of 97.797. The U.S. dollar fell as investors changed their position on their defensive bets.
Euro, dollar, and other major currencies
At 11:07 GMT, the dollar index which tracks the greenback against a basket of currencies dropped 0.4% on the day to 97.993.
The euro jumped against the U.S. dollar, with the pair up 0.4% at 1.13, having touched its highest point in four weeks.
The risk-sensitive Australian and New Zealand dollars rose on Wednesday. The Australian dollar was up 0.3% on the day at $0.7528.
Investors are closely monitoring the Federal Reserve and its plans. The central bank raised rates by 25 basis points at its March 16 meeting. They expect the Federal Reserve to be more hawkish than the European Central Bank, driving the dollar higher against the euro.
Spain’s latest CPI data for March showed prices rising at their fastest in a long time. Nevertheless, the European Central Bank’s President Christine Lagarde said food and energy prices should stop rising, helping the euro zone avoid the combination of stagnant growth and high inflation feared by economists.
In Europe, data, as well as policymaker warnings, highlighted the severity of the situation. The war in Ukraine had a huge impact on Europe.
The Japanese yen staged a recovery from its recent seven-year lows. The Japanese currency recovered after a meeting between the Bank of Japan’s Governor and Prime Minister Fumio Kishida.
At 11:15, the U.S. currency was down 0.9% on the day against the yen, at 121.83.
