The euro dropped to its lowest level in 6-1/2 months against the greenback on Monday as investors worried about possible U.S. tariffs that would hurt the euro area’s economy. Meanwhile, the U.S. dollar index – a measure of its value relative to a basket of foreign currencies – slightly overshot the highs seen right after the U.S. presidential election with markets still waiting for clarity about future U.S. policy. “It does feel like the markets are pricing in a red wave more and more. I think the dollar is the beneficiary of that,” said Bipan Rai, managing director at BMO Global Asset Management.

The sensitivity of the euro to the threat of higher U.S. import tariffs was evident late on Friday when media reported that President-elect Donald Trump was lining up Robert Lighthizer, seen as a hawk on trade, to run his trade policy, analysts said. Sources familiar with the matter said Trump has not asked Lighthizer to return to the agency overseeing trade policy. The single currency was down 0.7 per cent at $1.0643. It dropped 0.78 per cent on Friday. Politics remained under the spotlight after German Chancellor Olaf Scholz cleared the way for snap elections.  The dollar index was 0.56 per cent firmer at 105.59, after hitting 105.50, its highest since July. Last week, it jumped more than 1.5 per cent to 105.44, after U.S. election results showed Trump’s victory. (CAN)

Photo: A shopper pays with a ten Euro bank note at a local market in Nantes, France. (Reuters)…[+]