Dollar demand returns

The US dollar came back into demand after suffering a month-long pullback, with analysts pointing towards euro weakness as a potential factor.

Demand for the euro continued to decline on Wednesday, as the single currency suffered at the hands of central bank bond-buying chatter, and further Greek default fears.

The greenback rose to a three-week high versus the euro, putting an end to its worst performance against the single currency in four years.

Recently, the European Central Bank hinted it would accelerate its quantitative easing programme during the summer months. Furthermore, Greece continues to make headlines over its debt crisis. The most recent news suggests that it won’t be able to make its next repayment to the International Monetary Fund, unless a deal to unlock bailout funds is reached.

Meanwhile, against the Japanese yen, the dollar hit a two-month high.

It remains to be seen whether the US dollar has ended its correction phase and will return to a trend higher. However, a number of banks’ forecasts point towards the dollar reaching parity with the euro later in the year.