LONDON, (Reuters) – The dollar held close to a 20-year-high Monday while the euro struggled around $1.05 as investors prepare for a hectic week of central banks meetings and a possible Federal Reserve rate increase.

Public holidays closed markets in London, Asia, and London so trade was very quiet.

The Fed is expected to raise rates 50 basis points at its next meeting. Investors also expect Jerome Powell, the Fed’s Chair ofhawkishness, to make comments after the meeting.

As the Fed tries to control inflation, markets are pricing in a rapid rate increase from them.

Investors scrambled for dollars, as well as a slower pace of European Central Bank tightening. Also, there were concerns about the economic impact of war in Ukraine. The euro was at its lowest level since 2017.

Its best month-to-month performance since January 2015 was achieved with a gain of 5% for the The in April.

We expect the USD will remain strong against the EUR as we are hawkish FOMC [Federal Open Market Committee]USD support will come from geopolitical issues and the US’ stance. “Short-term investors might look to sell rallies above $1.08,” wrote Thomas Flury and Brian Rose (senior U.S. economist, UBS Global Wealth Management) in a research paper.

The forecasts for euro/dollar have been reduced to $1.05 per month from the previous $1.11 for September, $1.08 December and $1.10 in March 2023.

Last day, the dollar index fell marginally to 103.19. Euro traded 0.1% higher at $1.0555

BNP Paribas (OTC) stated last week that the euro fell to below $1.05 for five years because of large speculative flows, and not worries about an economic slowdown.

The dollar rose half a percentage on offshore markets to reach 6.6895, which is just below its highest level since late 2020.

Sterling fell 0.1% to $1.2569 while Japan’s currency was at 130.16 against the dollar, but not below recent lows.

The Bank of England will host a Thursday meeting of the central banks. It is anticipated that it will raise rates by 25 basis points, or 1%.

As Wall Street selloffs weakened risk appetite, the Australian and New Zealand dollar initially dropped sharply during Asian hours. This was in spite of the possibility that home interest rates would rise.

The currency was at 0.7060 by 0715 GMT, having bounced back from its three-month lows.

As fears of recession in Europe, and China’s lockdowns, weakened risk assets, the Australian dollar lost 5.7% in August.

After losing 6.9% in April, the dollar fell to $0.6422 which was its lowest level since mid 2020.