The dollar reached a high on Thursday of three weeks against many different currencies, while the euro fell to levels of mid-December on concerns more fighting over the budget in the U.S. would be taking place.
The initial optimism that took place due to the deal signed late Tuesday that averted the fiscal cliff including budget cuts and tax hikes, pushed the dollar down early Wednesday. However, the euphoria was lost when worries over additional budget talks taking place for the future started to emerge.
Due to that, the dollar was given a boost taking it to its highest level since early December. Often times, the dollar is helped when uncertainty appears in the market and market strategists said it will even go higher over the following weeks.
Adding to evidence that the deal struck to stave off the fiscal cliff was not completely resolved, Moody’s Investors Services said the U.S would have to do more or the ratings agency might have to adjust their Aaa debt rating for the country.
Strategists said the euro weakness taking place could continue on because the euro zone lacked fundamentals, because of a possible interest rate cut by Europe’s Central Bank and because of new concerns over debt that could take place at any time from one of the common currency countries.
In U.S. budget, talks are expected to continue through February and could get quite bitter before they are over and that would help to push the dollar up even more.
