The implied promise of a rate hike by the European Central Bank (ECB) in April sent the euro soaring on Monday to more than $1.40, as investors welcomed signs that the ECB would take more direct steps to deal with inflation.
While the joint currency had fallen a bit on the news of the Greek devaluation by Moody’s and concerns over rising oil prices, it had stayed strong since last week’s surprise statement by Jean-Claude Trichet, president of the ECB, that that body would most likely increase interest rates next month. Analysts had not expected action on that front till the fourth quarter.
Reuters reported that apparent buying from Middle East accounts buoyed the currency, with accelerating gains coming from triggered stop-loss orders as the currency hit first $1.4005 and then $1.4025. However, it stalled before it reached a $1.4050 options barrier.