LONDON -The dollar steadied in the European session, after hitting its lowest in nearly seven weeks during the Asian session, helped by optimism about the pace of vaccine rollout in Europe and U.S. Treasury yields remaining below their March spikes.
The dollar has fallen so far in April as U.S. bond yields retreated from the 14-month highs touched last month. The moves are a reverse of what happened in the first quarter of the year, when the dollar strengthened as U.S. Treasury yields rose, offering higher returns on the greenback.
The euro was up 0.2% at $1.2056 - its highest in nearly seven weeks - after having passed the key $1.20 in the previous session.
Commerzbank strategist You-Na Park-Heger wrote in a note to clients that the recent fall in the dollar is due to the U.S. Federal Reserve's reassuring the market that it will not end its monetary stimulus anytime soon, while an improving vaccine situation in Europe is supporting the euro. But she said that the situation could rapidly change.
"The economic recovery in the U.S. might drive up inflation expectations further, fuelling rate hike speculation. The news situation in the euro zone in connection with corona might change again as uncertainty remains high," she said.
Some analysts said the support for the euro likely came from the announcement that the European Union has secured an additional 100 million doses of COVID-19 vaccine by BioNTech and Pfizer.
Global markets turned more cautious during the session, with Wall Street futures slipping as investors turned to results from Netflix and other major technology-related companies this week to sustain the positive start to the earnings season.
“I wouldn’t be surprised if U.S. equities back off a bit more this afternoon, euro-dollar goes under $1.20 for a bit ... just because this has now been quite a quick move, to here," said Kit Juckes, head of FX strategy at Societe Generale.
Versus the yen, the dollar broke the 108 level overnight, before reversing course, up 0.2% on the day at 108.410.
"USD/JPY is one G10 currency pair which has still not fully retraced the move higher from March when it started the month trading closer to the 106.00-level," Lee Hardman, currency analyst at MUFG, said in a note to clients.
The Australian dollar strengthened to a one-month high of 0.7816, helped by minutes from the Reserve Bank of Australia's April meeting, which showed the central bank expects a faster rebound from the pandemic.
At 1202 GMT it was at 0.7778, up 0.3% on the da . The New Zealand dollar was up 0.3% at 0.72005.
Oil prices edged higher on Monday, supported by a weaker U.S. dollar but gains were capped by concerns about the impact on demand from rising coronavirus cases in India.
The commodity-linked Norwegian crown hit its strongest since 2018 versus the dollar, and also reached its strongest since January 2020 versus the euro .
Bitcoin was up 1%%, trading at around $56,220. It sank as low as $51,541.16 on Sunday, after hitting a record high of $64,895.22 just days earlier.
(Reporting by Elizabeth Howcroft; additional reporting by Hideyuki Sano and Kevin Buckland; editing by Larry King and Steve Orlofsky) ((Elizabeth.Howcroft@thomsonreuters.com; +44 02075427104;))