The euro rose to a three-week high versus the dollar as reports of Ukraine retaking territory from Russia boosted sentiment while a European Central Bank policy maker said further interest-rate hikes will be needed to curb inflation, according to Bloomberg.
The common currency jumped as much as 1.2% following reports Ukraine’s forces had exploited a collapse in Russian defenses in the region of Kharkiv, raising hopes the tide may turn in a war that has caused an energy crisis and rampant price increases in Europe.
“Significant territory gains by Ukraine forces over the weekend is potentially good news, assuming Ukraine can push Russia further away and end the war on its own terms,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “An imminent end to the war seems like a long shot, but good news for now.”
The euro has now advanced about 2% from its September low of 98.64 US cents to trade at $1.0063 on Monday. The shared currency his still down more than 11% this year as the energy crisis saps the region’s growth outlook. JPMorgan Chase & Co. and Saxo Bank A/S both predict the euro will weaken to the 95 cent-level by year-end.