SINGAPORE- The dollar made a firm start to the week as Treasury yields rose with expectations of rapid-fire US interest rate hikes, while talk of bans on Russian gas kept the euro within sight of its 2022 lows.
The euro has been weighed down by worries about the economic damage from war in Ukraine and last bought $1.1047, not too far from last month’s almost two-year trough of $1.0806.
Germany’s defense minister said on Sunday that the European Union must discuss banning imports of Russian gas, which could drag further on growth and the currency, after Ukrainian and European officials accused Russian forces of atrocities.
Ukraine accused Russian forces of carrying out a “massacre” in the town of Bucha, which was denied by Russia’s defense ministry.
“Negative news on the war or a further lift in energy prices could see EUR/USD test $1.0800,” Commonwealth Bank of Australia analysts said in a note.
“However, an improvement in sentiment or a weak dollar following the (Fed) minutes could push EUR/USD through upside resistance around $1.1150,” they added, referring to March Fed meeting minutes due for release on Wednesday.
Elsewhere, talk of new sanctions kept the broad mood cautious in early trade, and the dollar was up a bit against the Australian and New Zealand dollars as the commodity currencies’ rally cools with easing export prices.
The US dollar index was steady around 98.529.
Data on Friday also showed US unemployment hitting a two-year low of 3.6 percent last month, strong enough that investors bet it would strengthen the Federal Reserve’s resolve to tackle inflation by lifting rates sharply.
