The dollar took its strongest beating against a broad range of currencies in more than two years on Thursday as investors celebrated Europe's plan to contain its long-running debt crisis by dumping the safe-haven greenback. The dollar appeared the biggest loser from the deal, which could refocus attention on weak US budget fundamentals.
The euro rose 2 percent to a seven-week high against the dollar and the US currency slumped to a record low versus the yen. "The market reaction is justified despite the scepticism and despite the deal having some weaknesses because Europe made a clear step in the right direction," said Alessio de Longis, portfolio manager for the Oppenheimer Currency Opportunities Fund in New York, which has assets under management of $163.52 billion as of September 30.
The euro last traded around $1.4189, up 2.06 percent on the day. The single currency's peak for the session was $1.4247, its strongest since September 6, according to Reuters data. On its way higher against the dollar, the euro burst through its 200-day moving average, adding momentum to the rally.
"Now that Europe has seemingly fixed their shorter-term fiscal issues, people are going to compare Europe to the US on the longer-term fiscal horizon and in my view Europe seems to be dealing with their fiscal problems in the longer term," said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut.
The dollar index had its biggest one-day percentage fall since May 2009, crashing through its 200-day moving average. The dollar was down 0.32 percent at 75.92 yen on electronic trading platform EBS after falling as far as 75.661 yen, a record low. Thursday's euro euphoria also helped boost the Australian dollar, which jumped 3 percent against the greenback. The US dollar also slumped 2.4 percent against the Swiss franc.
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