• Single currency gains with yen as oil and stocks founder
  • Fed's Yellen gives semi-annual testimony to Congress this week

The euro approached a three-month high and the yen pared earlier declines as lower stock markets and crude oil prices hurt appetite for riskier assets, boosting demand for currencies used to fund those investments.

The 19-nation shared currency, which tends to appreciate at times of market turmoil, erased earlier losses against the dollar. It extended last week’s advance, which was its biggest gain in about 11 months.

Stock indexes in Europe fell for a sixth session and oil dropped in New York and London. The dollar weakened against most of its 16 major peers with investors showing skepticism that the Federal Reserve will raise rates in March and that the pace will pick up for further policy tightening this year.

Market focus will turn to Fed Chair Janet Yellen’s Congressional testimony in Washington on Feb. 10 for clues on what the odds of a near-term interest-rate increase are.

“Risk is the predominant factor,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “The bigger-picture trend in terms of dollar/yen and euro/dollar is very much complicit with risk appetite turning once again lower after a relatively lackluster session with large parts of Asia out.”

Markets closed Monday for the Lunar New Year holidays include those in China, Hong Kong, Indonesia, Singapore and South Korea.

Stretch added that Yellen’s comments will be “absolutely pivotal” is shaping the “market’s interpretation of where the Fed goes from here.”

The euro added 0.2 percent to $1.1175 as of 10:26 a.m. London time, after rising 3 percent last week. It reached $1.1246 on Friday, its highest level since October. The yen strengthened 0.2 percent to 116.64 to the dollar, paring an earlier decline of 0.6 percent.

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