Investing.com - The broadly stronger dollar rose to nine-year highs against the euro on Monday as expectations for quantitative easing measures by the European Central Bank were fuelled by concerns over slowing inflation and political uncertainty in Greece.
EUR/USD hit lows of 1.1858, the weakest since February 2006, and was last at 1.1904, down 0.82% for the day.
The single currency was pressured lower after ECB President Mario Draghi said Friday the risk of the bank not fulfilling its mandate of price stability is higher now than six months ago.
Uncertainty over Greece’s future in the euro zone also weighed ahead of upcoming elections later this month.
Investors were also looking ahead to German inflation data due later in the day, ahead of the wider euro zone inflation report on Wednesday. The datawas expected to show that German inflation fell in December.
The dollar dipped against the yen, with USD/JPY edging down 0.10% to 120.37.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, rose to highs of 91.97 on Monday, the most since December 2005.
Demand for the dollar continued to be underpinned by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.
The Fed is widely expected to raise interest rates in the coming year as the steady economic recovery in the U.S. continues.
Elsewhere, sterling was struggling near 17-month lows after data showing a slowdown in construction activity in the U.K. last month underlined expectations that the Bank of England will keep rates on hold for most of 2015.
GBP/USD was down 0.50% to 1.5249, not far from overnight lows of 1.5167, the weakest since August 2013.
USD/CHF was up 0.81% to 1.0095 as weakness in the euro added to pressure on the Swiss National Bank to defend its 1.20 per euro exchange rate floor.
The commodity-exposed Australian, New Zealand and Canadian dollars were trading at multi-year lows, as oil prices fell to five-year lows on Monday. AUD/USD was down 0.41% to 0.8057, NZD/USD lost 0.51% to trade at 0.7664 and USD/CAD rose 0.19% to 1.1805.