Around 7:30 p.m., the single currency lost 0.30% to 1.1018 dollars for one euro.
The euro retreated on Monday once morest a recovering dollar, driven by a sharp rise in bond yields and an aggressive speech from the Fed boss on rates.
Around 6:30 p.m. GMT, the euro lost 0.30% to 1.1018 dollars for one euro.
Last week, the euro had benefited from the hopes of investors on the negotiations between Russia and Ukraine and the dollar had experienced its first week of weakness in a month.
But Monday, at a conference on the economy the President of the US Central Bank Jerome Powell appeared even more determined to raise rates quickly to counter inflation.
“He continued on the hawkish tone of his press conference last week, arguing that the Fed is going to need to act quickly (…) even if it means moving to more restrictive levels to restore price stability” said John Higgins, an economist at Capital Economics.
In this speech, Jerome Powell also “left the door open for a half basis point (0.50%) rate hike at one of the next meetings of the Monetary Committee”, warned the economist .
The Fed raised its key rates on Wednesday, for the first time since 2018, in order to fight once morest inflation, which is at its highest in 40 years. And several new increases are to be expected in 2022, probably one at each meeting.
The dollar was firmed up while the boss of the Central Bank also assured, despite these prospects for rate hikes, that he does not see a high risk of recession next year, because the American economy is “very, very solid”.
In addition, one of his lieutenants at the Fed, the president of the Atlanta branch, Raphael Bostic, for his part warned that inflation might still accelerate.
Also supporting the greenback, yields on 10-year US Treasuries, which move inversely to the price of bonds that were in demand, climbed sharply.
These rates rose to more than 2.30% for the first time in three years, once morest 2.14% on Friday.
2-year yields also climbed above 2%, their highest since 2019.
Concerns around the Russian-Ukrainian conflict also weighed on the euro.
If the idea of a ceasefire benefited the currency the previous week, “currency traders realized that the euphoria surrounding the negotiations was premature,” said Ulrich Leuchtmann, analyst at Commerzbank.
The Kremlin estimated on Monday that a potential European embargo on Russian oil would hit “everyone”, at a time when the European Union must study at a meeting the possibility of new sanctions once morest Moscow.
The President of the European Central Bank Christine Lagarde has also ruled out the risk of “stagflation”, that is to say that non-existent growth is combined with high inflation.
If inflation is there, “we do not currently see any elements of stagnation” in the economy of the euro zone, said the leader during a question and answer session at the Institut Montaigne in Paris.
Unlike the US Federal Reserve (Fed), which has started to tighten its screws, the ECB is keeping its rates at their ultra-low level for the time being.
