Investing.com - The euro rose above the $1.20 level on Tuesday for the first time since January 2015 and the dollar fell to four-month lows against the yen amid renewed geopolitical tensions on the Korean peninsula.
EUR/USD hit a high of 1.2033, the strongest level since Jan. 2 2015 and was at 1.2027 by 03:30 AM ET (07:30 GMT).
Hopes that the European Central Bank will soon announce plans to taper its bond-buying stimulus program have driven the euro up around 14% against the dollar so far this year.
The single currency has strengthened since Friday after a speech by ECB President Mario Draghi didn’t address the recent strength of the single currency.
Draghi also avoided giving new clues as to when the ECB might wind down its stimulus programs but acknowledged that the euro zone’s economic recovery is gaining ground.
The euro hit fresh eight year highs against the pound, with EUR/GBP up 0.31% to 0.9290, the most since October 2009.
The euro has risen more than 9% against sterling so far this year, reflecting the diverging economic outlook for the euro zone and the UK and its implications for monetary policy.
The dollar fell to four-month lows against the safe haven yen after North Korea fired a missile over Japan, escalating tensions in the region after a recent period of calm.
USD/JPY was last down 0.58% at 108.62 after falling as low as 108.34 overnight, the weakest level since April 17.
The dollar fell to five-week lows against the traditional safe haven Swiss franc, with USD/CHF slumping 0.62% to 0.9494.
The yen and the Swissy are often sought in times of geopolitical tension or market turbulence because both countries have large current account surpluses.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.31% at 91.88, the weakest since January 2015.
The dollar was already on the defensive after speech by Federal Reserve Chair Janet Yellen on Friday made no reference to monetary policy, disappointing some investors who had hoped she would sound a hawkish tone.
The dollar was also under pressure amid concerns over the impact Hurricane Harvey on the U.S. economy after catastrophic flooding hit Texas and knocked out many oil refineries in the U.S. Gulf Coast.