Investing.com - The dollar rose to eight week highs against a basket of other major currencies on Wednesday as optimism over the economic recovery in the U.S. and the prospect of monetary easing by the European Central Bank bolstered the greenback.
EUR/USD hit lows of 1.3591, the weakest since February 13 and was last down 0.26% to 1.3600.
The euro has weakened broadly against the other major currencies, falling more than 2% against the dollar since the ECB indicated at its May 8 meeting that it is comfortable with easing monetary policy as soon as its next meeting in June, to tackle low levels of inflation in the region.
On Tuesday, ECB President Mario Draghi said the bank was aware of the risks of persistently low inflation and was prepared to take steps to get euro zone inflation back to its target, the latest indication that the bank could ease monetary policy as soon as next week.
The annual rate of euro zone inflation was 0.7% in April, well below the ECB's target of close to but just below 2%.
Meanwhile, data on Wednesday showed that the number of people unemployed in Germany rose by the largest amount in five years in May. The seasonally adjusted jobless total rose by 24,000 this month to 2.905 million, compared to expectations for a fall of 15,000.
The German unemployment rate remained unchanged at 6.7%, well below the euro zone average of 11.8%.
The dollar was lower against the yen, with USD/JPY down 0.25% to 101.72, while USD/CHF was close to three month highs at 0.8979.
Demand for the dollar continued to be underpinned after data on Tuesday showed that U.S. durable goods orders rose unexpectedly in April and another report showed that U.S. consumer confidence improved in line with forecasts this month.
The pound fell to six-week lows, with GBP/USD dropping 0.61% to 1.6707.
The drop in the pound came after recent lackluster U.K. private sector data on retail sales and mortgage lending tempered expectations for a rate hike by the Bank of England later this year.
The Australian and New Zealand dollars were sharply lower, with AUD/USD down 0.46% to 0.9215 and NZD/USD dropping 0.98% to 0.8479. Elsewhere, USD/CAD was almost unchanged at 1.0861.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, rose 0.17% to 80.56, the highest since April 7.