Investing.com -- EUR/USD fell sharply on Monday to approach near seven-month lows, as currency traders sought safety in the dollar following Friday's terrorist attacks in Paris that claimed the lives of at least 125 civilians in the capital of France.
EUR/USD traded between 1.0675 and 1.0759 during Monday's session before settling at 1.0686, down 0.0088 or 0.82% on the session. The currency pair closed in the red for the third straight session and the fourth time over the last six trading days while resuming its push toward parity on Monday. Over the last month of trading, the euro has fallen more than 6% against the dollar amid signs of diverging monetary policies between the Federal Reserve and the European Central Bank.
EUR/USD likely gained support at 1.0673, the low from November 10 and was met with resistance at 1.1496, the high from Oct. 15.
Currency traders closely monitored activity in Syria after France launched a series of airstrikes against ISIS on Sunday, which claimed responsibility for the attacks in Paris. Major catastrophes such as last week's terrorist attacks in France can provoke hasty reactions in foreign exchange markets before normal activity resumes.
Investors also continued to react to the increasing likelihood that the Fed will raise short-term interest rates when it meets next on Dec. 15-16. When Fed chair Janet Yellen testified in front of the House Financial Services Committee on Nov. 4, she said the December meeting will be considered "live" for a rate hike decision if the Fed sees continued improvement in the economy and labor market. Then, last Thursday, Fed vice chair Stanley Fischer reiterated that he believes long-term inflation will move back toward the Fed's long-term goal of 2%, as transitory effects from a strong dollar and low energy prices continue to recede.
Nearly a decade has passed since the FOMC last raised its benchmark Federal Funds Rate. Short-term interest rates have remained at their current near-zero range for nearly seven years since the height of the Financial Crisis.
The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, jumped more than 0.50% on Monday to an intraday high of 99.54 before settling at 99.47. The index approached last week's highs of 99.60 when it surged to its strongest level in seven months.
Yields on the U.S. 10-Year gained three basis points to close at 2.27%. Although bond yields on U.S. 10-year treasuries have surged by 23 basis points over the last month they are still down by six basis points on the year.