Investing.com -- EUR/USD inched down to extend a recent losing streak, as the dollar surged to three-month highs and positive developments in Athens provided further signals that a Grexit can likely be averted.
The currency pair traded in a tight range between 1.0820 and 1.0871 before settling at 1.0814, down 0.0017 or 0.15%. The euro has now closed lower against its American counterpart on four of the last five session and six of the last eight. After peaking above 1.14 on June 22, the euro has lost approximately 5% against the dollar.
EUR/USD likely gained support at 1.707, the low from April 22 and was met with resistance at 1.1173, the high from July 1.
In Greece, banks throughout the country reopened after more than two weeks of closures. Greek customers still face strict capital controls, where they will be limited to withdrawals of EUR 60 a day and EUR 420 per week. The move coincided with a EUR 4.2 billion loan repayment Greece made to the European Central Bank on Monday, after the cash-strapped nation received bridge financing from its creditors of more than EUR 7 billion late last week.
Equities markets throughout Europe closed higher, as the potential for a Greek departure from the euro continued to recede. The STXE 6000 rose modestly by 0.35% to 407.12, while the Italian FTSE MIB surged 1.12% to 5,142.49.
The dollar, meanwhile, surged to three-month highs before retreating slightly just before the close. At one point, the U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, reached an intraday high of 98.30, its highest level since April.
On Friday, strong U.S. inflation data bolstered the case for a 2015 interest rate hike by the Federal Reserve. In a monthly report, the U.S. Department of Labor's Bureau of Labor Statistics said its Consumer Price Index (CPI) for June rose by 0.3% on a monthly basis, in line with consensus estimates. On a year-over-year basis, the CPI gained 0.1% above analysts' forecasts for a flat reading.
A reading of Core CPI, which strips out food and energy prices, provided even more optimism for the hawks at the Fed in favor of a September rate hike. The core reading, which the Fed believes provides a more accurate gauge of inflation, rose 0.2% from May and 1.8% over the last 12 months. The U.S. central bank would like to see inflation move toward its targeted goal of 2% over a long-term basis before it raises its benchmark Federal Funds Rate for the first time in nearly a decade.
Earlier last week, Fed chair Janet Yellen reiterated that conditions in the economy are likely to justify an interest rate hike at some point this year. Fed St. Louis president James Bullard appeased the hawks even further on Monday when he suggested that there is a 50% chance the FOMC will raise rates during its September meeting.
Yields on the U.S. 10-Year gained three basis points to 2.383 while yields on the U.S. 2-Year rose four basis points to 0.710.