USD Higher Against EUR, JPY and Emerging Markets

The dollar hit multi-year highs against the euro and yen and emerging markets were under mounting pressure on Tuesday, as the prospect of the first rise in U.S. interest rates in almost a decade stoked global volatility.

The skittish mood spread from Asia into Europe where stocks <0#.INDEXE> fell a second day despite the European Central Bank’s new bond buying campaign continuing to push down the euro and the bloc’s already record-low borrowing costs.

Driving up the dollar was speculation that the Federal Reserve will start lifting interest rates from mid-year after another stellar set jobs data on Friday and a subsequent chorus of hawkish Fed policymaker comments.

 
The euro’s rapid melt lower was compounded by worries about Greece as euro zone finance ministers prepared to meet in Brussels, a day after the head of the group, Jeroen Dijsselbloem, had urged Athens to “stop wasting time” and start reforms.

Selling in the euro had gathered pace again in Europe as a break below a major layer of chart support at $1.0762 to $1.0735 left bears eyeing $1.07 the figure and some mulling parity. Britain’s pound was also piling on the pressure. It topped 1.40 euros for the first time since late 2007.

The dollar had broken higher on the yen in Asia to reach 122.02, territory not visited since July 2007.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza