German business confidence rose more than expected in December as the outlook for Europe’s biggest economy improved despite the energy crisis and high inflation, an Ifo survey showed on Monday.
The euro rose 0.2% to $1.06085, a far cry from the six-month high of $1.0737 hit last week.
“I think overall the dollar is weaker due to a slight increase in risk trading”said John Doyle, vice president of operations and trading at Monex USA.
The US currency, which has risen strongly for much of the year, buoyed by a hawkish Federal Reserve and rising geopolitical tensions, has come under pressure in recent weeks on investor bets that the bank could have limited scope to keep raising rates to combat inflation.
Last week, Fed Chairman Jerome Powell said the US central bank will raise rates further next year despite a potential US recession, and rates are expected to reach a maximum above 5%.
Vice President of the European Central Bank, Luis de Guindossaid on Monday that the institution would continue raising euro zone rates to curb inflation and that it was not considering revising its medium-term price stability target of 2%.
The Australian dollar, considered a liquid indicator of risk appetite, rose 0.19% after Chinese authorities pledged to shore up the country’s battered economy in 2023 in the face of the spread of COVID-19 in the capital, Beijing.
The dollar was up 0.2% against the yen, after falling as much as 0.7% in the previous session, after reports that Japan is considering a key monetary policy review after a new governor is named. Bank of Japan in April.
Meanwhile, Bitcoin was down 1.7% at $16,553, as cryptocurrencies continued to rack up heavy losses following the collapse of digital currency operator FTX.