NEW YORK: The dollar edged higher against the euro on Wednesday as the risk of extended lockdowns in Europe to combat the spread of COVID-19 and worries about the pace the rollout of vaccines weighed on the common currency.

European countries are struggling to contain the contagion of the coronavirus amid worries that a new variant of the virus could lead to more stringent lockdowns and more economic pain.

Investors are also fretting about the slower pace of the rollout of vaccines relative to the United States and Britain may hobble economic recovery in the region.

The dollar was 0.2% higher against the euro, ahead of Thursday’s European Central Bank meeting, which, after the broad easing of monetary policy last month, is unlikely to produce any major change.

The risk-sensitive Australian dollar was 0.79% higher on the day, while the New Zealand dollar rose 0.69%.

While the dollar has perked up in recent weeks on the back of a rise in US Treasury yields, investors still expect the currency to weaken.

A combination of heightened risk appetite in global markets and UK-specific optimism lifted the pound on Wednesday, as it strengthened to its highest in nearly three years against the dollar.