The euro hit a five-month low against the Swiss franc on Thursday, and the U.S. dollar nursed losses after dovish comments by the Fed chief broke a recent rise in Treasury yields, Reuters reports.
Growing signs of a slowdown in China and a rise in infections globally stemming from the more infectious Delta variant pushed safe-haven government bond yields lower, and the dollar weakened against the franc and the yen.
"This has been triggered by a change in the market narrative i.e. from inflation scare to growth scare," said Vasileios Gkionakis, head of FX strategy at Banque Lombard Odier & Cie SA.
Against the Swiss franc, the euro slipped to a five-month low of 1.0813 francs per euro, its lowest level since mid-February.
The franc's appeal as a safe-haven currency has been boosted by the rise in infections.
Its strength also comes after the Swiss central bank chief rejected introducing a higher inflation target to help policymakers reach its goal of price stability.
The rise in infections also weighed on the greenback though the euro steadied against the dollar at US$1.1831, recovering from an early April low of US$1.1772 hit before the Powell testimony in the previous session.
Against a broad basket of currencies, the dollar steadied at 92.41 despite 10-year benchmark U.S. Treasury yields extending their decline for a second consecutive session.
The British currency was also among the rare outperformers against the dollar after Bank of England interest rate-setter Michael Saunders said the central bank could decide to stop its current programme of government bond purchases early after an unexpectedly sharp rise in inflation.
The UK pound climbed by 0.2 percent to US$1.3815 as money markets ramped up bets of rate increases in coming months, with June 2022 futures now pricing in 18 bps in cumulative increases compared to 9 basis points on Wednesday.
The Canadian dollar also weakened on Thursday - with help from softening oil prices - even though the Bank of Canada further tapered its policy support on Wednesday.
