Euro falls to lowest level in a month on West sanctions fears

Euro falls to lowest level in a month on West sanctions fears

The euro fell to its lowest level in a month against a strengthening dollar as the prospect of new Western sanctions on Russia added pressure on the European currency.

The euro was 0.15% lower against the dollar at $1.08900 at 0800 GMT, after briefly touching a one-month low of $1.08735.

The United States and its allies prepared new sanctions on Moscow over civilian killings, which President Volodymyr Zelenskiy described as war crimes as heavy fighting and Russian airstrikes pounded the besieged port of Mariupol.

ING FX strategists Francesco Pesole and Chris Turner told clients that a new round of sanctions against Russia is expected to be announced today by the US and the EU, with the impact on energy exports likely to keep the euro under pressure.

The French eurosceptic, far-right candidate, Marine Le Pen, closing in on President Macron in the polls ahead of this month's presidential elections adds another threat to the euro, the ING strategists said.

The dollar index, which measures the dollar against six peers, rose by 0.12% to 99.600 after touching its highest since May 2020 of 99.759.

The index was up 0.5% on Tuesday after Fed Governor Lael Brainard, typically seen as a more dovish policymaker, said she expects a combination of interest rate increases and a rapid balance sheet runoff to bring US monetary policy to a more neutral position later this year, with further tightening to follow as needed.