Euro tops $1.20 level for first time since early 2015

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Quotation boards display the foreign exchange rate against the US dollar (L) and Euro (C) at a foreign exchange brokerage in Tokyo on August 29, 2017, after a missile was launched by North Korea earlier in the day. (AFP Photo)
Quotation boards display the foreign exchange rate against the US dollar (L) and Euro (C) at a foreign exchange brokerage in Tokyo on August 29, 2017, after a missile was launched by North Korea earlier in the day. (AFP Photo)

The euro surged past a key level on Tuesday as investors grew bullish about its outlook after the head of the European Central Bank refrained from talking about the single currency's recent strength and in the backdrop of brewing U.S. fiscal problems.

At 0810 GMT, the single currency touched $1.2070, the highest level since early January 2015. That compared with $1.1978 late in New York on Monday.

Having gained more than 14 percent against the dollar this year, financial markets were relieved that ECB President Mario Draghi made no mention of the euro's strength at the Jackson Hole conference in Wyoming last week, focusing instead on subjects such as global trade.

"Positive sentiment looks set to persist," NFS Macro analyst Nick Stamenkovic told AFP, adding that recent eurozone data had sparked optimism over the "strengthening growth picture".

At the same time, the greenback has been hampered by jitters over US President Donald Trump's possible tax reforms, and geopolitical fears after North Korea's missile launch over Japan.

Sentiment was also dented in the wake of monster storm Harvey.

"The dollar continues to suffer from the Trump reality check," noted Oanda analyst Craig Erlam.

"His promises of spending and tax cuts been a none-mover, weighing on the dollar because of the economic impact that will be lost and because it likely means less (interest) rate hikes from the Federal Reserve.

"Geopolitical tensions, troubles within the White House and Congress, and now Hurricane Harvey pile further pressure on the greenback."

Harvey had battered into Texas on Friday as a Category Four hurricane, tearing down homes and businesses on the Gulf Coast, and triggering massive floods.

Morgan Stanley strategists remain bullish about the single currency with little resistance seen before the $1.2280 levels as global reserve managers are still underweight.

"The euro is coming from an extreme undervalued situation on a purchasing power parity basis and long term investors are, in our view, still underweight the euro," they said in a daily note.

Against sterling, the euro skipped to its highest level since October 2016 at 92.83 pence.

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