The euro held its gains on Monday (Aug 28) as traders bet that the European Central Bank would start to wind down its crisis-era stimulus programme, while lower expectations for further tightening in the United States weighed on the dollar.
While ECB boss Mario Draghi made no mention of the bank's plans for its bond-buying scheme in a much-anticipated speech on Friday, analysts said his optimism about the eurozone economy was enough to fuel euro buying.
"Mr Draghi provided investors an opportunity to keep adding to long positions," said market strategist Hussein Sayed of online foreign exchange brokerage FXTM.
Janet Yellen's decision not to discuss the Federal Reserve's plans for future interest rate rises was also seen as an indication of the US central bank's reticence to announce any more increases.
The single currency rose as high as US$1.1973, around its highest since January 2015, while it was also around eight-year highs against the pound. The dollar continued to struggle against the yen.
While the ECB is widely expected soon to begin tapering its stimulus, its policymakers are concerned about the impact of a strong currency on the bloc's exports.
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"Mario Draghi will be tearing his hair out," said Greg McKenna, chief market strategist at AxiTrader.
"If saying nothing can drive the euro to its highest level since January 2015 then the ECB president and his colleagues will be genuinely worried about the impact an announcement to further reduce its QE programme could have on the single currency."
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.source:AFP