NEW YORK: The dollar rose to a two-week high on Thursday as a combination of technical trading and strong US economic data and potential weakness in the euro zone weighed down the continental currency.
Analysts said the euro's fall against the dollar below a technically important level around $1.07 triggered orders by traders to sell. The euro fell to $1.0681, its lowest level since March 15.
The move added to the dollar's gains against a basket of major currencies. The dollar index was modestly higher before the euro's selloff, and it rose to 100.52, its highest level since March 16.
The euro's support level was cracked by the combination of the currency's fall to around $1.07, the rise of US Treasury bond yields to session highs, and a rise in oil-linked currencies from higher crude prices , said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited, citing information from Macquarie's trading desk.
The euro was already trading lower thanks to data released earlier in the day that showed German and Spanish consumer inflation slowed more sharply than expected in March, prompting worries that sluggish growth in the euro zone could persist.
In the United States, gross domestic product grew faster than previously reported in the fourth quarter of last year thanks to robust consumer spending, the Commerce Department said.
The data had investors ready to buy the dollar and sell the euro, and the break in the euro's price gave them a reason to do so, analysts said.
"Most of the market thought that the dollar had gotten too undervalued after last week and were just waiting for it to bounce," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. "Once it was clear that it bounced they were going to jump in and buy it or (sell the euro)."
The dollar briefly weakened in early trading after CNBC reported that President Donald Trump was assessing new ways to go after countries that try to weaken their currencies. The report, citing two anonymous sources, offered no detail on what measures might be under consideration.
It was the Trump administration's latest attempt at "jawboning," or trying to talk the dollar lower, said Mark McCormick, North American head of FX strategy at TD Securities.
"That's been their operating mandate," he said. "They believe the dollar is too strong."