Currencies: Euro and Sterling Crumble as Dollar Dominance Returns

The US Dollar (USD) asserted dominance across the G7 board on Monday, capitalizing on technical breakdowns in European currencies and a flight to safety triggered by escalating tensions in South America and Eastern Europe.

EUR/USD Breaks Key Support

The Euro (EUR/USD) plunged to a four-week low near 1.1670, succumbing to heavy selling pressure. The single currency is facing a “double whammy”:

1. Geopolitics: Tensions involving Russia/Ukraine and Venezuelan fallout are weighing heavier on European sentiment than the US.

2. Technicals: The pair has violated the 100-day Simple Moving Average (SMA), triggering algorithmic sell orders.

Market participants are eyeing the 1.1665 zone. A sustained break below this level could open the door for a deeper correction toward 1.1600, as the divergence between the US economy's resilience and Eurozone stagnation widens.

GBP/USD Falls Toward 1.3400

Sterling (GBP/USD) followed suit, trading around 1.3420 and testing the 1.3400 psychological support. A cautious outlook from the Bank of England (BoE) combined with general risk-off sentiment has stripped the Pound of its recent yield advantage.

Emerging Markets Hit

The drag was not limited to majors. The Indian Rupee (INR) slid to a two-week low, and the EUR/JPY cross softened to 183.65, confirming a broad rotation out of risk-sensitive currencies and into the safe-haven buckets of the USD and, to a lesser extent, the Swiss Franc (CHF).