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Euro Holds Firm as U.S. Stimulus Hopes Weigh on Dollar

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The euro held ground on Tuesday, hovering near a 212 year peak as investors looked past new restrictions to fight COVID19 and focused on the likelihood of more U.S. stimulus that would weigh on the dollar.

The single currency has rocketed 4 since early November to its highest level since April 2018, in part because of broadbased selling of the U.S. dollar and as investors bet a vast European recovery fund package will lift the regions economies.

Commerzbank analyst Esther Reichelt said that new restrictions in Germany to address the spread of COVID19, rather than weigh on the euro were actually boosting its allure versus the dollar.

A strict lockdown in Germany and the resulting economic effects are further going to support all those who do not expect inflation to pick up in the euro zone in the foreseeable future. And that is exactly what is supporting the euro, she said.

The euro was last at 1.2135, little changed on the day.

The dollar index, which measures the greenback against a basket of currencies, rose slightly to 90.802.

On Monday the dollar sunk as low as 90.419, a level unseen since April 2018.

The dollar has been weakened by hopes that U.S. lawmakers can agree 1.4 trillion in spending.

A 908 billion bipartisan COVID19 relief plan will be split into two packages, a person briefed on the matter said, raising hopes that at least a large part of the plan that already has bipartisan support will be approved.

Elsewhere, sterlings Monday surge triggered by…

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