Sydney - The
euro dropped from a six-month high against the dollar as relief over Emmanuel
Macron’s victory in the French presidential election was replaced by concern
the European Central Bank will maintain currency-weakening stimulus.
The shared currency fell versus most of its major peers as
Macron’s expected victory over Marine Le Pen spurred investors to take
profits. ECB Executive Board member, Peter Praet said last week the
region’s recent economic improvement isn’t yet sufficient reason to tighten
policy. ECB President Mario Draghi will speak to the Dutch parliament on
Wednesday.
“The euro is a sell on rallies above 1.10 against the dollar
as the ECB’s senior leadership under Draghi and Praet remain cautious about the
outlook for euro-zone inflation, while U.S. payrolls suggests the Fed will
continue to hike rates,” says Mansoor Mohi-uddin, a Singapore-based strategist
at NatWest Markets, a unit of Royal Bank of Scotland Plc.
Read more: Rand weaker as dollar and euro rally
The euro is likely to be supported on any dips, according to
Peter Dragicevich, a foreign-exchange strategist at Nomura Singapore.
“The mix of an improving euro-zone economy, the looming
shift by the ECB toward a tapering of its asset purchases and less
accommodative monetary policy stance, and the euro zone’s large current account
surplus [equal to about 3.4% of GDP] are positives for the currency,” he said.