The euro is at a 9-month high amid European indications that interest rates will continue to rise

Today, Monday, the euro reached its all-time high in month against the dollar, as statements pointing the direction of the European Central Bank to raise interest rates at steep rates were met with market expectations of a less aggressive approach from the US Federal Reserve.

The euro hit $1.0927, breaking a recent high of $1.08875, to trade at its highest level since April of last year.

This was helped by comments from ECB Governing Council member Klaas Knut, who said interest rates would rise by 50 basis points each in February and March and continue to rise in subsequent months.

Jane Foley, head of currency strategy at Rabobank, said the euro was also getting support as inflation fears eased due to falling natural gas prices.

And he continued: “The growing confidence in the prospects future of the economy, or at least the elimination of much of the pessimism, is one of the reasons for supporting the euro. Also, it appears that the European Central Bank will continue raising interest rates in rather high proportions.

The British pound moved up to $1.24475, its all-time high in seven months.

The dollar index fell 0.2% against a basket of competing currencies, including the euro and the pound sterling, to 101.73, just off an eight-month low of 101.510.

However, the dollar managed to hold its ground against the yen after the Bank of Japan defied market pressures to reverse its ultra-loose bond policy. And the dollar was up 0.2% to hit 129.875 yen, after last week’s sharp fluctuations between 127.22 and 131.58.

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