Euro scales three-week high on Chinese recovery hopes

Euro rose in European trade to three-week highs against dollar as risk appetite improved in the markets on hopes for Chinese economic recovery and following bullish remarks by ECB members. 

EUR/USD rallied 0.5% to 1.0614, the highest since May 5, with a session-low at 1.0556, after losing 0.25% on Friday.

Euro rallied 1.5% against dollar last week, the largest weekly profit since late January away from five-year lows.

Chinese Economy 

China is starting to loosen up restrictions on movements in major cities as Covid 19 infections decline, while China's central bank took a bold move and cut interest rates to bolster economic activities. 

European Rates

Several ECB members have clearly paved the way for an interest rate hike starting in July, to control the runaway inflation, with the first such spike expected in July. 

Now markets price in a 0.9% rate hike by the year's end from the European Central Bank.

The Dollar

The dollar index fell 0.6% on Monday, marking three-week lows at 102.44 against a basket of major rivals. 

Investors now don't expect the greenback to achieve further gains as all Fed rate hikes are mostly priced in already.