Investing.com - The euro edged higher against the dollar and the yen in quiet trade on Monday, as financial markets remained calm after last week’s selloff.
EUR/USD added 0.18% to 1.2783, holding below the three-week highs of 1.2876 hit last Wednesday.
Data on Friday showed that U.S. consumer sentiment rose to the highest level since July 2007 this month and another report showed that U.S. housing starts rose more than expected in September.
The data reinforced expectations that the Federal Reserve will raise interest rates in the second half of 2015 and calmed investor jitters at the end of a volatile week of trading.
The dollar fell to three week lows against the euro mid-week and weakened against the other major currencies amid fears that slower global growth would act as a drag on the U.S. economy.
Meanwhile, concerns over the stagnating euro zone economy continued to weigh on the single currency. Annual inflation in the euro zone was just 0.3% in September, well below the European Central Bank’s target of close to but just under 2%.
In recent months the ECB has cut interest rates to record lows, extended new four-year loans to banks and announced a plan to purchase asset-backed securities, a form of quantitative easing, in a bid to spur growth in the euro area.
Comments by various ECB officials on Friday reiterated the need for governments to implement structural reforms and raise productivity in order to boost growth.
The single currency was also higher against the yen, with EUR/JPY rising 0.18% to 136.64.
Demand for the yen was hit by speculation that Japan’s pension fund is growing closer to increasing its holdings of stocks and overseas assets, which would drive up demand for foreign currencies.
The Nikkei newspaper said Monday that the $1.2 trillion Government Pension Investment Fund will raise its target for foreign bonds and shares to around 30% from 23%.