US dollar declined against most of its major peers on concerns that FED Chairman Ben Bernanke may announce the banks intention to preserve the current level of monthly purchases. The euro rose against the dollar above the psychological level of 1.3400 today, while the Japanese yen rallied.
“The market is expecting Bernanke to express some discomfort with the rise in long-term interest rates and is probably looking for something relatively dovish from the press conference. The market is setting itself up for the big event of the day. In the long-run, I expect the yen to strengthen versus the dollar.”, said Adam Cole, head of Group-of-10 currency strategy at Royal Bank of Canada in London, cited by Bloomberg.
US dollar lost ground by 0.3% versus the yen to 95.08 at 11:58 GMT on Wednesday, after weakening over 1% in the past two days. Japanese currency rose by 0.2% against the euro, with EUR/JPY hitting 127.39. EUR/USD pair traded at 1.3403 at 12:34 GMT, after reaching a session high at 1.3416 on Tuesday, the highest value since February 13th.
FED Ben Bernanke is expected to hold a press conference in Washington right after the central bank’s two-day meeting. He said on May 22nd that the Federal Reserve could reduce its monthly purchases of 45 billion USD of Treasuries and 40 billion USD of mortgage-backed securities, if the employment outlook was to show sustainable improvement.
Japanese yen has added 6.6% during the past month, presenting the best performance among the ten major currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has risen by 2.1%, while the US dollar has declined by 2.7%, Bloomberg reported.
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