U.S. Dollar Falls against Euro on Favorable Euro Zone Service Sector Report

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U.S. Dollar Falls against Euro on Favorable Euro Zone Service Sector ReportThe U.S. dollar fell to nearly its lowest level in seven weeks versus the euro on Tuesday, as favorable European service sector data fuelled the euro’s rise.

The dollar plunged to 79.24 against a basket of currencies tracked by Reuters, its lowest level since the end of October. The euro benefited from strong service sector data in Italy and Spain, spurring it to touch $1.3928, its strongest level since March 19.

The dollar has been hurt by waning speculation that the U.S. Federal Reserve will announce a hike in interest rates anytime soon after it ends its asset-buying program.

“The dollar got a brief boost on Friday but the fact we are back where we were tells you everything you need to know about the forces currently at play,” said Neil Mellor, a London-based strategist with Bank of New York Mellon. “We had a good figure but no-one wants to own the dollar. Raising interest rates in the U.S. is still a very fuzzy concept. Until we hear that definitively the Fed is planning a rate rise, the euro and others will remain attractive.”

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The dollar plunged 0.1 percent versus the yen to 102.00, close to Monday’s figure of 101.86 yen, the lowest in two weeks. Financial markets in Japan were shut on Tuesday for a national holiday.

The Australian dollar also gained 0.3 percent against the greenback to trade at $0.9283. The euro’s rise has been hampered by a strong campaign waged by ECB that opposes the currency exceeding $1.40. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com