* Euro dips as ECB appears wary of changing language
* Dollar rises as Fed speakers remind markets of rate hike
* Sterling dips as Britain formally launches Brexit
(Updates to U.S. afternoon trading)
By Dion Rabouin
NEW YORK, March 29 The dollar rose to its
highest in more than a week against a basket of currencies on
Wednesday on outlooks for U.S. and European interest rates and
as investors saw the selloff that followed U.S. President Donald
Trump's healthcare setback as overdone.
Reuters reported European Central Bank policymakers were
wary of changing their policy message after tweaks this month
upset investors and raised chances of a surge in borrowing
The euro fell to $1.0741 following the report, its
lowest since March 21. That boosted the dollar index,
which tracks the greenback against six rival currencies, to
100.130, its highest since March 21.
The dollar also got a boost from Chicago Fed President
Charles Evans, who said he was in line with most of his
colleagues in supporting further rate hikes this year. Evans is
known as one of the Fed's most consistent supporters of low
On Friday the dollar had fallen to its lowest in four months
after the U.S. House of Representatives pulled a bill to rewrite
the American healthcare system backed by President Donald Trump.
Investors saw it as an indication Trump was likely to have
difficulty with other parts of his agenda including tax reform
and fiscal spending that are likely to increase U.S. inflation.
Those fears may have been overdone, analysts said, and with
Fed officials still lining up to support further interest rate
hikes, the dollar is on a solid footing.
"The selloff in the dollar that we saw in reaction to the
news Friday was probably a bit of an overreaction," said Shaun
Osborne, currency strategist at Scotia Capital in Toronto. "The
underlying faith in the reflation trade is coming back a little
Osborne also pointed to technical factors in the dollar/euro
trade as the euro has approached the $1.09 mark.
"It really boils down to the fact that the euro rallied, it
turned around and it's pretty expensive to be short dollars at
this point," he said.
The United States has higher interest rates than the euro
zone, which means traders lose money by holding positions that
are long euro and short dollar. The Fed recently raised its
overnight interest rate to a range of 0.75 to 1.00 percent while
the ECB holds negative rates on some deposits.
Adding to pressure on European currencies, Britain invoked
Article 50 on Wednesday, officially beginning its exit from the
Sterling was down 0.25 percent at $1.2416.
(Additional reporting by Tokyo markets team; Editing by Andrew
Hay and Chizu Nomiyama)