The dollar extended gains on Wednesday and the euro fell, retreating from the key $1.20 level reached in the previous session.
Wednesday’s counter-trend was attributed by analysts to profit taking and technical resistance to the $1.20 mark hit Tuesday, spurred on by comments from European Central Bank chief economist Philip Lane, who said the euro-dollar rate “does matter” for monetary policy.
Lane’s comments show the ECB was rattled by the appreciation of the euro and fall in the dollar, said Kenneth Broux, FX strategist at Societe Generale, suggesting the central bank is watching inflation closely.
The euro was 0.61% lower on Wednesday at $1.184.
The dollar index =USD was last up 0.53% to 92.741, pulling out of the 28-month low hit on Tuesday.
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