The US dollar fell today to the lowest level since February against the euro and the Great Britain pound before rebounding and extended its decline versus the Japanese yen. The dollar weakened on the speculation that the Federal Reserve would resume its purchases of the government debt to stimulate the US economy.
The Dollar Index, which tracks the US currency versus the currencies of six major US trading partners, went up 0.3 percent to 77.63 after tumbling to 76.91, the lowest level since January 15th. Ben Bernanke, the Chairman of the Federal Reserve, said this week that the previous round of the asset purchases was supportive to the economy and more buying would likely also help. At the same time, the European countries expected to avoid introducing of the stimulus, the outlook which was supported by today’s decision of the UK central bank to keep its interest rates unchanged.
The analysts remained divided on the next move of the dollar against the euro. Some say that nothing fundamental has changed and the dollar remains noticeably weak and should decline further. Another opinion says that the euro is overbought and soon the correction should occur.
EUR/USD was gradually rising, touching the intraday high of 1.4027, but then sharply fell, yet resumed its advance and traded near 1.3922 as of 19:14 GMT. GBP/USD showed the same trend, rising to 1.6016, but before declining to 1.5876. USD/JPY slowly declined and traded at 82.37 after opening at 82.93.
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