Investing.com - The euro slid to session lows against the firmer dollar on Monday as the mood in markets turned more positive despite ongoing concerns over the outlook for global growth following the Federal Reserve’s decision last week not to raise interest rates.
EUR/USD was down 0.42% to 1.1250, extending a pullback from Friday’s highs of 1.1459.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.3% to 95.65, recovering from Friday’s three-week lows of 94.19.
The dollar strengthened and European equities moved higher despite a shaky start to Monday’s session and oil prices also climbed.
But investors remained cautious after the Fed held interest rates steady on Thursday, amid concerns over soft inflation and the effects of recent market volatility on the U.S. economy.
While the decision was not completely unexpected the Fed’s concerns over the uncertain outlook for global growth rattled financial markets and pressured the dollar lower.
Investors were looking ahead to Chinese manufacturing data on Wednesday, as well as surveys of the euro zone private sector for fresh indications on the condition of the global economy.
The euro’s gains were held in check after European Central Bank Chief Economist Peter Praet reiterated Saturday that the bank is prepared to enlarge its monetary stimulus program if necessary to combat risks from global economic turbulence.
Earlier this month the ECB cut its forecasts for growth and inflation and indicated that its trillion-euro bond-buying program could be scaled up.
Elsewhere in the euro zone, Alexis Tsipras was set to form a new coalition government in Greece after his left-wing Syriza party won a general election on Sunday.
Tsipras’s re-election reassured financial markets that Athens will stick to its bailout commitments.
Tsipras said his party now has a "clear mandate", but warned that Greece still faced difficulties ahead as the new government begins implementing the harsh economic reforms demanded by the €86 billion bailout package agreed with the country's creditors in July.
Elsewhere, the euro was steady against the yen, with EUR/JPY at 135.5. The dollar gained ground against the Japanese currency, with USD/JPY up 0.38% to 120.46.