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The
euro edged lower, following its sharp retreat the previous day
from a one-month high, as some hopes for a ceasefire in Ukraine
faded. It was still set for weekly gains.
The U.S. currency has also benefited from safe-haven flows as
peace talks between Russia and Ukraine stumbled, though they are
set to resume on Friday.
The Federal Open Market Committee (FOMC) will next decide policy
on May 5, with CME Group's FedWatch tool showing a 68.8% chance
of a half-percentage-point rate increase. That would follow on
from a quarter-point hike on March 16, when the Fed embarked on
a new tightening cycle.
Another FOMC meeting will follow on June 14-15.
Economists predict Friday's Labor Department report will show
that close to half a million U.S. jobs were added last month,
with the unemployment rate ticking lower while wage growth
accelerated.
Upside potential for the dollar index remains in scope "amid
ongoing waves of fiercely hawkish Fedspeak and an aggressive
frontloaded profile that includes almost 100 bps in hikes over
the FOMC's next two meetings," Westpac strategists wrote in a
client note.
They predicted a break above 100 for the dollar index "in coming
weeks".
For the euro zone, the key data on the calendar will be the euro
area HICP inflation number for March, due at 0900 GMT.
The euro was 0.1% lower at $1.10555 at 0800 GMT.
"The euro was dragged down by a correction in euro zone bond
yields yesterday and less optimism around advancements in
Russia-Ukraine peace negotiations," said ING FX strategist
Francesco Pesole.
"Markets don't seem to be particularly rewarding the euro for
the lower oil prices," he added.
As oil prices fell, the commodity-linked Norwegian crown
extended its fall to hit a two-week low versus the dollar in
early London trading, before recovering some ground to trade at
8.7865.
The dollar index, which gauges the greenback against six
counterparts including the euro and yen, rose 0.2% to 98.535,
building on Thursday's 0.50% climb.
Mid-week, it sank to a four-week trough of 97.681 amid a
month-long consolidation that followed a breathless climb to a
more than nine-month high at 99.415.
Cryptocurrency bitcoin slumped 1.6% to $45,024, after touching a
one-week low as U.S. and European Union lawmakers moved to
tighten their cryptocurrency stances.
On Monday, bitcoin had touched $48,234.00 for the first time
since the start of this year.
(Reporting by Joice Alves and Kevin Buckland; Editing by
Catherine Evans)
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