London May 23, 2022: The euro rallied on Monday after the European Central Bank president said policymakers would likely lift interest rates out of the negative territory by September, while the dollar extended its recent slide.
A calmer mood in equity markets in European trading also pressured the dollar, which fell sharply last week but has been the go-to currency for investors this year when risk assets tumbled and worries about the economy and inflation jumped.
The euro was the big gainer, adding as much as 1.1% to $1.0687. It has now risen 3.3% since hitting a multi-year low of $1.0349 on May 13.
ECB President Christine Lagarde said in a blog post that the bank was likely to lift the euro area deposit rate out of the negative territory by end-September and could raise it further if it saw inflation stabilizing at 2%.
The euro’s rally came as the dollar fell broadly, with a sell-off that began accelerating last week.
The U.S. dollar index, up about 16% to a two-decade high of 105.01 over the 12 months to the middle of May, fell 0.8% on Monday to 102.15.
The Australian dollar, which initially showed a muted reaction to the victory for the center-left Labor Party in national elections at the weekend, climbed 1% to $0.7125.
The Japanese yen rose to 127.47 yen per dollar.
The euro also rose 0.3% versus the Swiss franc to 1.0315 francs, undoing some of the franc’s gains since the Swiss National Bank chairman last week said policymakers were ready to act if inflation strengthened.
