The euro hit a 12-year low against the dollar on Tuesday after falling below $1.07 as the European Central Bank continued its quantitative easing program and as expectations of a U.S. Federal Reserve rates hike grew.
The dollar index, which measures the greenback against a basket of major currencies, hit its highest since September 2003 when it hit 98.64. The euro fell to $1.0695, its lowest level in 12 years.The euro also hit 129.49 yen, its lowest level against the yen since 2013.
“We’re seeing a generally hawkish tone out of the Fed,” said Chris Gaffney, president of EverBank World Markets in St. Louis.
“There is a real desire from the Fed to just start the process, to get rates off zero,” he said.
The launch of European Central Bank quantitative easing on Monday drove European yields lower and weakened the euro.
Earlier, the dollar hit 122.040 yen, its strongest level since July 2007. The greenback also hit 0.9988 franc, its highest since the Swiss National Bank scrapped a 1.20 francs per euro cap on Jan. 15.
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The dollar also hit its highest against the Mexican peso since at least 1989, at 15.6218 pesos, and its highest against the Brazilian real in nearly 11 years, at 3.1722 real earlier on Tuesday.
Renewed concerns about Greece’s finances also weighed on the euro. Euro zone ministers warned Greece on Monday that it had “no time to lose” in securing further funding.
“Greece is thoroughly unresolved,” said Richard Franulovich, a senior currency strategist at Westpac in New York.
The dollar pared gains against the euro and erased gains on the day against the yen, however, after Bloomberg reported on Twitter that White House Council of Economic Advisers Chairman Jason Furman said the surging dollar is a headwind for U.S. growth.
The euro was last down about 1.30 percent at $1.0699 against the greenback. The dollar also was last down 0.29 percent against the yen at 121.09 and was last up 1.25 percent against the Swiss franc at 0.9987 franc.
The dollar index was last up 1 percent percent at 98.60.
The British pound also hit a seven-year high against the euro on Tuesday after the euro zone currency breached 71 pence for the first time since 2007.