Investing.com - The euro spiked to fresh six-month highs against the U.S. dollar on Monday following remarks by German Chancellor Angela Merkel, sending the dollar to a fresh six-month trough against a currency basket.
EUR/USD was up 0.22% to 1.1233 by 07.15 ET, the highest level since November 9.
The gains in the euro came after Merkel said the single currency was “too weak”.
Speaking in Berlin, Merkel said Germany’s record trade surplus was partly due to the European Central Bank’s expansionary monetary policy, which has driven down the euro.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid to 96.94 following the remarks, which was its deepest trough since November 9.
The index had risen to the day’s highs earlier amid relative calm in U.S. politics with President Donald Trump on a trip to the Middle East.
With Trump on his first official overseas trip as president the steady stream of revelations surrounding the FBI’s investigation into alleged Russian interference in November’s presidential election has receded.
The index ended the previous week down 2.12%, having given up all the gains it had made following the U.S. presidential election in November amid fears that the U.S. political system could become engulfed by crisis, preventing lawmakers from pushing through tax or spending reforms.
The dollar was slightly higher against the yen, with USD/JPY edging up 0.15% to 111.41, but gains were held in check amid heightened geopolitical tensions with North Korea.
Sterling was also lower against the dollar, with GBP/USD down 0.23% at 1.3003.
The pound fell to intra-day low of 1.2965 earlier after polls showing that the Conservative Party’s lead has narrowed ahead of UK elections due to be held on June 8.
Market watchers had been confident that British Prime Minister Theresa May would secure a strong win in the election, strengthening her hand in Brexit negotiations and allowing her to ignore lawmakers pushing for a hard Brexit.