Kevin Buckland

TOKYO, Reuters – On Monday the safe-haven U.S. Dollar traded at a close 16-month high against the euro due to growing concern over the effects of rising COVID-19 infection rates in Europe. Austria imposed a complete lockdown while Germany is considering doing the same.

The greenback was at its weakest since October, against riskier Australian and Canadian currencies. Commodity-linked currencies were also under pressure due to a slump in

Bullish remarks by Christopher Waller and Richard Clarida, Federal Reserve officials on Friday that suggested that a quicker pace of stimulus tapering might be necessary in light of a rapid recovery and high inflation gave additional support to the dollar.

Tapering sooner could lead to earlier interest-rate rises. At the moment, the market looks ready for the Federal Open Market Committee to raise rates mid-year.

The currency gauge, which measures the currency against six main peers, was at 96.065 last week, just shy of its 16-month peak of 96.266.

At $1.1274, the euro fell 0.2% to its lowest point since July 2013. It was at that level on Friday when it plunged 0.66%.

” has been in free-fall and will likely get the lion’s share of attention from clients looking for a play on growing restrictions and tensions across Europe,” Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a note to clients.

Short EUR is attractive for momentum traders, trend-followers, and tactical traders.

Europe again has been the center of the pandemic and accounts for 50% of all global deaths.

Germany is Europe’s most populous country and has been hit by a fourth wave of infected people. Jens Spahn, Germany’s Health Minister said that the warning was not meant to be interpreted as a call for vaccinations.

Austria is now the first Western European country to implement a COVID-19 full lockdown beginning Monday.

Fears that Europe’s slowdown could impact energy demand have dented crude oil. This was in addition to the possibility of an American-led emergency stockpiles release.

To C$1.26575 the dollar gained 0.21% against oil-linked Canadian, closing at Friday’s highest level of C$1.2663, its strongest since Oct. 1.

This fell slightly to $0.7234. It was previously at $0.72285, just 0.32% below its Oct. 6 low.

“We expect AUD to remain heavy in the near‑term (and) a dip to $0.70 is possible,” with a slowing Chinese economy and the Reserve Bank of Australia’s dovish policy stance dragging on the currency, Joseph Capurso, a strategist at Commonwealth Bank of Australia (OTC:), wrote in a report.

He said that the USD could continue its rally in this week’s market and reach a new high of 2021. Another round of high U.S. inflation could propel the USD and FOMC rate rises market pricing.”

Dollar was mostly flat against its safe-haven yen. It traded at 114.03yen/dollar, which is in the middle part of its range for the last week and a quarter.

After falling from its record high of $69,000 earlier in the month, crypto traded for $58,100.