Forex – Dollar Retreats as EUR/USD Claws Back Losses

© Reuters. – The dollar eased from fresh five month highs as gains on the back of abating trade war fears were offset by a recovery in the euro from multi-month lows.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.01% to 93.59, easing from a five-month high of 93.97.

rose 0.03% to $1.1774, bouncing from a five-month low of $1.1717 but market participants said the rally would be temporary as ongoing political uncertainty in Italy would keep a lid on upside momentum.

“Political uncertainty in Italy, slowing growth in Europe, stronger growth in the US, and dollar friendly Treasury yields should continue to keep EUR/USD in sell-the-rally mode,” said Action Economics.

Prior to retreating, the dollar was up sharply as U.S. Treasury Secretary Steven Mnuchin’s comments of a pause on the U.S.-China trade war, triggered a wave of buys on the greenback against safe-haven currencies like the yen.

“We’re putting the trade war on hold,” Mnuchin said on Fox News Sunday.

rose 0.29% to Y11.09, after hitting a high of Y111.40.

A slump in to $1.3409, down 0.45%, added support for the greenback amid ongoing Brexit concerns and raft of recent weaker U.K. economic data.

fell 0.54% to C$1.2815 as a surge in oil prices supported the Canadian dollar, weighing on the pair.

The uptick in oil prices come as Venezuela’s Nicolas Maduro risked further pressure from the International community following his re-election win on Sunday, raising the prospect of further sanctions on the country, stifling its beleaguered energy industry.

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