London Europe’s single currency traded above the $1.50 level versus the U.S. dollar for the first time in 14 months on Wednesday, breaking through an important psychological barrier that will create added heartburn for euro-zone officials worried the strengthening currency will crimp opportunities for an export-led economic recovery.
The euro touched $1.5001 versus the dollar just before 10 a.m. Eastern before temporarily retreating. It resumed its upward march later in the session, eventually notching a high at $1.5022. In recent action, the euro changed hands at $1.5002.
The euro climbed as U.S. stocks moved into positive territory, signaling growing risk appetite, which has been a negative for the dollar. A weaker tone in global equity markets earlier in the day had kept the $1.50 level out of reach, analysts said.
The move comes just days after euro-zone finance ministers argued in favor of a stronger dollar. A top aide to French President Nicolas Sarkozy on Tuesday said the dollar at $1.50 would be a “disaster” for euro-zone industry.
The euro-zone economy, led by powerhouses Germany and France, is expected to show a return to growth in the third quarter partly because of strengthening global demand.
The euro’s rise, however, could add to any adverse repercussions from a loss of momentum in global growth, said Howard Archer, chief European economist at IHS Global Insight. The most obvious losers would be major exporters to the United States and to countries with dollar-linked currencies, he said.
The euro, which debuted in 1999 and is now shared by 16 countries, including Germany, France and Italy, last traded above $1.50 in August 2008. The euro hit an all-time high at $1.6040 versus the dollar in July 2008.
Analysts say interest-rate differentials and rising risk appetite remain key factors behind the euro’s performance.
The dollar, which rallied sharply on safe-haven demand last year as the financial crisis took hold, has been under steady pressure since the global equity rally took hold in March.
The euro has rallied by around 20 percent versus the dollar since then. The euro has also scored highs against a trade-weighted basket of currency rivals.
The European Central Bank has left its key lending rate on hold at a record low 1 percent. The U.S. Federal Reserve, meanwhile, has left its key lending rate near zero.