Euro slips after hitting 3-year high

london — The euro fell on Wednesday after rocketing to a fresh three-year high in early trades above the $1.23 line as some investors ramped up bullish bets about the currency though some concerns from policymakers this week damped broader optimism.

Overall dollar weakness and growing optimism about the outlook of the European economy in 2018 has lent fresh legs to the euro’s rally after it gained more than 10 per cent last year.

But the speed of the rise in the opening days of 2018 — up more than 3 per cent in the last two weeks — has invited some comments from ECB officials this week, highlighting some growing concerns, according to analysts.

In an interview to an Italian daily la Repubblica, Vitor Constancio, the vice-president of the European Central Bank, said he did not rule out that monetary policy would still continue to be “very accommodating for a long time”.

On Tuesday, Jens Weidmann, Germany’s representative on the ECB’s policymaking body said it would be “appropriate” for the European Central Bank to stop its bond purchases, due to run at least until September.

“The ECB is playing the good cop and the bad cop in terms of their comments over the euro but there is no doubt the currency’s rally has sowed the seeds of uncertainty in the ids of ECB policymakers,” said Viraj Patel, an FX strategist at ING in London.

The single currency rose to a session high of $1.2323 against the dollar in Asian trading before falling 0.2 per cent to stand at $1.2238.

The Australian dollar rose 0.1 per cent to $0.7970 and the New Zealand dollar dipped 0.1 per cent to $0.7260. — Reuters