Investing.com - The euro extended gains against the broadly weaker U.S. dollar on Monday, rising to five-month peaks after European Central Bank executive board member Sabine Lautenschlager said markets should prepare for a change in policy.
EUR/USD touched highs of 1.0892, the most since November 11, up 0.88% for the day.
The single currency hit the highs of the day after Lautenschlager said the markets should get ready for “a change” in ECB policy.
The remarks, which came during the ECB’s annual press conference on banking supervision, added to speculation that it could soon slow its quantitative easing stimulus program.
The dollar remained broadly weaker as doubts about the Trump administration’s ability to deliver on campaign economic pledges rattled investors after a planned vote on a healthcare overhaul was pulled after it didn’t gather enough support from Republicans.
The vote had been viewed by investors as a critical test of President Trump's ability to work with Congress to deliver on his pro-growth economic agenda, including tax cuts and infrastructure spending.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.72% at 98.87, its lowest trough since November 11.
The index had surged to almost 14-year highs in early January on the back of expectations for a strong economic recovery and higher inflation, the so called ‘Trump Trade’.
The euro was lower against the pound, with EUR/GBP slipping 0.2% to 0.8641 as markets braced for Britain to begin the formal process of leaving the European Union later in the week.