The euro is rising Monday against the dollar and yen, with EUR/USD propelled by negative USD news and likely to be driven by growing expectations Lehman Brothers might file for bankruptcy, BarCap said. “The weekend’s risk events are largely unresolved,” BarCap added, noting that cheaper oil and the Bank of America-Merrill Lynch deal are providing USD with some support.
On Friday, the dollar fell against the euro by the most since it began a strong rally two months ago,
as a weak U.S. retail sales report reignited fears the Federal Reserve may have to cut interest rates again.
“The first leg of the dollar’s recovery appears to be ending,” said Marc Chandler, global head of foreign exchange at Brown Brothers Harriman. “The dollar’s rally appears vulnerable to a shift in the pendulum of market expectations about Fed policy.”