TOKYO- The dollar was pinned near multi-week lows against most major currencies on Thursday as fading gains in US Treasury yields reduced the greenback’s interest rate advantage.
The euro was in focus ahead of a European Central Bank (ECB)meeting later on Thursday, where any positive comments about the economic outlook or hints of tapering bond purchases are expected to send the common currency racing higher.
Sentiment toward the dollar has weakened as last month’s spike in Treasury yields reverses course, but some analysts say the outlook over the longer term remains positive due to a strong US economy and an improved coronavirus vaccination program.
“We’ve confirmed that demand for Treasuries is healthy, which means there is no upward pressure on yields,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
“In this environment, the dollar will test the downside against the yen. The euro is different because there are signs that people inside the ECB are more optimistic about the economy, which raises questions about tapering.”
The dollar stood at 107.99 yen, close to a seven-week low.
The euro was quoted at $1.2043, not far from its strongest since March 3.
The British pound bought $1.3939.
The onshore yuan rose to 6.4828 per dollar to reach its strongest level since March 12. – Reuters
