Euro plunges to 11-year low as Dallas Fed President Richard Fisher calls for rate increase

The euro continued its decline on Tuesday, 10 March, and hit a new 11-year low on comments by Dallas Fed President Richard Fisher who said that the US should promptly end its easy monetary policy and press ahead with an interest rate increase, followed by a set of gradual moves higher.

The EUR/USD dropped to 1.0784, its lowest since early 2003, and down 0.6% from the previous close of 1.0851. The euro has been falling since May last year and has shed 19.3% until February-end.

So far this month, the single currency has dropped more than 400 pips, or 3.63% against the US dollar.

Fisher's comments came in his final speech as a policymaker as he is stepping down this month after 10 years at the US central bank.

Fisher has been a hawk for long even though the central view at the Fed was to keep rates at near zero since December 2008. The US central bank recently said that it was prepared to hike rates later this year, and the market is expecting it happen sometime between June and September.

The US jobs data that came as a big positive surprise, has added to the rate increase hopes.

The USD index jumped 1.35% on 6 March to a new 11-year high of 97.65 and then extended the gains to 98.19 on 10 March. So far in March, the index has risen 3%, adding to the 20% rally since July through February.

Data on 9 March showed German trade surplus narrowed at the start of this year as exports fell more than expected even as imports deceleration slowed.

The eurozone has a light data calendar for the rest of the week. French and Italian industrial output for January and Greek inflation data for February will be released later in the day; French non-farm payrolls figures for the fourth quarter and Portugal's inflation data will be out on 11 March.

With nothing major due from the region, US data like weekly jobless numbers will be key for the single currency. The February producer price index and the March Reuters/Michigan consumer confidence index are other two sets of US data that could impact forex markets this week. Both the data are due on 13 March.