The dollar fell broadly on Monday, nearing a 14-month low against the euro, as optimism about global economic recovery and expectations US interest rates will stay low kept the US currency under pressure.
European equities rose 1.1 percent, reflecting buoyant investor risk appetite, which helped lift higher-yielding currencies such as the Australian and New Zealand close to multi-month highs against the US currency. The euro hovered just below the psychologically important $1.50 mark, though analysts said it may face stiff resistance ahead of that level.
Investors were also watching a eurozone finance ministers' meeting later on Monday for any comments on the single currency's recent strength. "The stock market is stronger, and more risk appetite seems to be driving things," said Peter Frank, currency strategist at Societe Generale in London. By 1131 GMT, the euro traded 0.2 percent higher at $1.4938, having earlier touched the day's high around $1.4956.
Late last week, the single currency rose to $1.4967, its strongest since August 2008. Against a basket of currencies, the dollar was 0.1 percent lower at 75.513, while the US currency slipped 0.1 percent against the yen to 90.85 yen. The Australian dollar traded near a 14-month peak, supported by a Reserve Bank of Australia official who said a return to normal monetary policy was appropriate.
The RBA raised rates to 3.25 percent this month, the first major central bank to do so. The Australian dollar rose 0.6 percent to $0.9223, while its New Zealand counterpart gained 0.8 percent to $0.7468, close to its highest since late July 2008. The euro has appreciated nearly 7 percent against the dollar so far this year and on Friday it jumped to 118.82 on a trade-weighed basis, close to historic highs.
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