The euro broke through the USD1.18 level this morning as the dollar continued to suffer from increased geopolitical tensions. The dollar's latest decline followed the broadcast of a tape in which a voice claiming to be ousted Iraqi leader Saddam Hussein called for forces allied to him to step up attacks on coalition troops in Iraq. "The dollar was under pressure against other majors on heightened geopolitical concerns," said Jenny Pollack, senior economist at AIB Treasury. "Markets also continue to look for evidence of the extent of the US economic revival." The euro also rose against the yen, which plunged after al Qaeda, which claimed responsibility for the weekend bombings in Istanbul, named Japan as a possible terror target.
At 0930, the euro was worth USD1.1825 - a three-week high - while it rose 1.2pc against the yen to 129.18 yen. The yen also suffered following a sharp drop on the Tokyo stock market amid concerns over the financial sector after the Japanese financial regulator ordered the country's biggest lenders to increase provisions on bad loans to their largest borrowers. //www.fxcentre.com