LONDON, April 8 - The euro rose to a 15-month high against the dollar on Friday, staying well-supported in the wake of a euro zone rate hike, while the prospect of a U.S. government shutdown pushed the dollar lower across the board.
The euro EUR= rose as high as $1.4422, though traders said it may struggle ahead of a large options barrier at $1.4430, which was expected to be heavily defended.
The dollar fell to its lowest since December 2009 versus a basket of currencies as the White House and Congress worked frantically to break a U.S. budget deadlock by the end of the day and avoid a government shutdown.
Investors were also lured by the prospect of higher yield, helping the Australian dollar to a fresh 29-year high versus the greenback while the low-yielding Japanese yen suffered, hitting an 11-month low versus the euro.
"We're seeing broad-based dollar selling, especially against currencies with a favourable yield," said Carl Hammer, currency strategist at SEB in Stockholm.
"With all the focus recently on debt problems in the euro zone periphery, what is going on in the U.S. highlights that the U.S. has budget problems of its own, while the euro continues to be driven by the prospect of more rate hikes".
The ECB raised its key interest rate by 25 basis points to 1.25 percent on Thursday and the central bank's president Jean-Claude Trichet signalled it was ready to tighten further if needed.
On balance, the comments were interpreted as making aggressive rate hikes look less likely, but the euro dipped only briefly afterwards and analysts said the prospect of another rate rise this summer would continue to support the single currency.
The euro was up 0.75 percent to $1.4411 EUR=. The euro's rise has extended following its breach this week of resistance near $1.4283, its November high and roughly where it faced trendline resistance drawn from its July 2008 record high.
Beyond $1.4430, the euro will target the $1.4500 psychological level and then the January 2010
Reuters
