Investing.com - The dollar drifted down to two-month lows against a basket of the other major currencies on Monday as investors awaited a number of U.S. risk events this week and as the stronger euro weighed.
The euro hit the highest level in two months against the dollar on Monday, as data pointing to robust growth in the euro zone helped overcome investors’ concerns over political uncertainty in Germany.
EUR/USD was up 0.18% at 1.1954 by 08:45 AM ET (02:45 PM GMT), the strongest level since September 22.
Demand for the euro continued to be underpinned after data on Friday showed that German business confidence hit a record high in November, putting the euro area’s largest economy on track for a boom.
The report came one day after official data showed exports and rising business investments were the main drivers of euro zone growth in the third quarter, indicating that the robust upswing will extend well into next year.
The strong reports helped ease investor concerns over political uncertainty in Germany, where Chancellor Angela Merkel is trying to form a minority coalition government.
The euro received an additional boost after Germany's Social Democrats' agreed on Friday to hold talks with Chancellor Merkel on renewing their outgoing coalition government.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.24% at 92.50, the lowest since September 26.
The dollar extended early losses against the yen, with USD/JPY skidding 0.46% to 111.02, the lowest level since September 18.
The dollar remained on the defensive amid concerns that persistently low inflation will undermine prospects for rate hikes by the Federal Reserve.
Investors were looking ahead to a confirmation hearing for Fed Governor Jerome Powell on Tuesday, selected by President Donald Trump as the next Fed chair.
Attention also shifted back to President Trump’s tax reform plans. Trump is to hold a meeting with Senate Republicans on Tuesday to discuss efforts to pass the proposed legislation.
Sterling rose to two-month highs against the greenback, with GBP/USD last up 0.36% at 1.3381.