Reuters: Dollar sags below 20-year peak

The dollar struggled to regain momentum on August 30, after being beaten back from a two-decade high versus major peers by a reinvigorated euro.

The tables turned for the two currencies as traders began ramping up bets for a super-sized 75-basis-point interest rate increase by the European Central Bank while paring the odds for one by the US Federal Reserve, according to Reuters. 

"Recent days have arguably been dominated more by hawkish ECB-speak than Fedspeak," Alvin Tan, a Singapore-based strategist at Royal Bank of Canada, wrote in a client note.

"There is obviously an active debate among the ECB council members" over the size of a hike to approve on September 8, Tan said.

Traders see better than 50% odds for a 75 bps move after a parade of ECB speakers at the Fed's annual symposium in Jackson Hole backed the case for a big hike. read more

By comparison, bets for a 75 bps increase by the Fed on September 21, while higher at 70%, have receded from as much as 75% on August 29.

Monthly U.S. jobs figures due on Friday will be closely watched for further clues to the interest rate outlook.

The dollar index - which measures the greenback against a basket of six currencies, with the euro the most heavily weighted - stood at 108.72 in Asian trading, after dropping back from 109.48 overnight, a level not seen since September 2002.

The euro edged 0.06% higher to $1.0003, adding to Monday's (August 29) 0.32% rally, its biggest in almost three weeks.