Dollar rises to two-decade highs as Australian and Chinese currencies fall.

On Monday, dismal Chinese economic statistics weighed on the Australian dollar and the Chinese yuan, as the US dollar maintained advances around a 20-year high.

The euro rose from its lows after comments by ECB policymaker Francois Villeroy de Galhau that the euro's depreciation might jeopardize the European Central Bank's attempts to guide inflation toward its goal. However, mood remained negative.

The COVID-19 lockdowns restricted employees and customers to their homes, causing a dramatic drop in retail and manufacturing activity in April. The offshore Chinese yuan remained close to a recent low of 6.8380 yuan set in September 2020.

In a report reducing its expectations for the euro and the yuan for the rest of 2022, Barclays (LON:BARC) analysts stated, "Increasingly, the danger is that zero-COVID (policy in China) may continue in place even into the party conference in the third quarter and into the winter season."

"As a result, since Omicron is famously difficult to manage, it may result in long-term movement limits."

The Australian dollar, which is the currency most susceptible to the Chinese economy, declined 0.68 percent. In London trade, it pared losses but was still down 0.5 percent.

After six weeks of increases, the dollar index stood at 104.57, having briefly surpassed the 105 mark on Friday, its best since December 2002. Investors boosted their long dollar bets, according to weekly positioning data.

The euro was slightly higher at $1.0422, but not far from its recent low of $1.0354, its lowest since early 2017. The level of support for the euro, according to analysts, is $1.0340.

The euro is expected to tumble to parity versus the dollar in the next year, according to HSBC analysts. "With considerably lower GDP and substantially higher inflation, the ECB is confronted with one of the most difficult policy problems in the G10 (central banks)," they stated.

After last week's turbulence, which was fueled by TerraUSD, a so-called stablecoin that broke its dollar peg but retraced its gains in early trading on Monday, crypto markets enjoyed a calm weekend.

Bitcoin was trading at roughly $29,500, down more than 5% from Thursday's low of $25,400, its lowest level since December 2020.