Euro extends gains to four-week high following the Silicon Valley crisis

Euro rose in European trade against dollar for the third straight session, hitting four-week highs on speculation about the European Central Bank's meeting this week, while European economic activity improves in the fourth quarter of the year.

The greenback sharpened its decline to month lows after US authorities intervened to limit the ramifications of Silicon Valley Bank's collapse, and amid prospects the Fed might take a less bullish path in the future. 

EUR/USD rose 0.4% to 1.0737, the highest since February 15, with a session-low at 1.0663, after rising 0.6% on Friday, the second profit in a row following mixed US labor data.

The ECB

The European Central Bank is convening this week to discuss policies with investors expecting a 0.5% rate hike for the third time in a row.

ECB President Christine Lagarde vowed to do all that's required to bring prices back to stability.

It's expected the ECB will take a bullish tone this week after strong euro zone consumer prices data. 

Analysts expect the ECB to hike interest  rates by successive 0.5% hikes in March, May, and June, with a 0.25% hike in July. 

The Dollar

The dollar index fell 0.9% on Monday, sharpening losses for the third session and hitting month lows at 103.68 against a basket of major rivals.

Mixed US labor data changed pricing for the US March rate hike once more, with markets expecting a 28% chance only for a 0.5% rate hike, and a 72% chance of a 0.25% rate hike. 

The dollar is extending losses after authorities intervened to limit the ramifications of the Silicon Valley Bank collapsed, asserting all clients will get their deposits back starting today.

Such a collapse hurt confidence in the US banking system and raised the odds the Fed will take a more bearish stance in policies.