US Dollar Climbs Against Euro Following Terrorist Attacks in Turkey and Germany

The US dollar rose against most of its major peers on Tuesday, having its biggest gains today against the Japanese yen following a new monetary policy decision from the Bank of Japan. The US currency also increased against the euro after two deadly terrorist attacks took place in Germany and Turkey.

The Bank of Japan released a monetary policy statement overnight, which said that the central bank will keep its policy unchanged by keeping its interest rate target at minus 0.1%. The widely expected statement also added that the 10-year Japanese government bond yield target will be maintained at about zero. The bank’s stimulus program remained unchanged at 80 trillion yen per year.

Looking ahead, the Bank of Japan raised its economic expectations for the year ahead, citing the maintained recovery trend the world’s third largest economy has been displaying recently. This is the first update to the central bank’s economic assessment since May 2015. The dollar rose after investors were relieved following the bank’s statement.

Meanwhile, two terrorist attacks happened in Ankara and Berlin, capitals of Turkey and Germany, respectively. A gunman shot and killed the Russian Ambassador to Turkey Andrei Karlov in an art gallery, in what was described by Russia’s foreign ministry as a terrorist attack. Turkish police then killed the gunman, who spoke in Turkish after the killing to demand support for Aleppo and Syria.

Another attack hit a Christmas market in Berlin. A man that was arrested by police drove a truck into a popular market in a crowded area, killing 12 people and injuring 50 more. The driver then ran from the truck, which had Polish license plates, before being arrested about two kilometers away. German Chancellor Angela Merkel said that the incident is believed to be a terrorist attack.

Traders felt cautious toward the euro following the attacks, which increased demand for the safety of the Swiss franc and lifted the dollar higher against the shared currency.

EUR/USD traded at 1.0391 as of 17:40 GMT on Monday, after touching 1.0354 at 12:45 GMT. EUR/USD opened trading today at 1.0402.

The Dollar Index, which measures the performance of the US currency against a number of its major peers, moved to 103.24 as of 18:51 GMT, after touching 103.64 at 12:45 GMT. The index was at 103.14 yesterday.

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