During early European deals on Wednesday, the U.S. dollar remained under selling pressure against most major currencies as investors continued to sell the greenback after the Federal Reserve hinted yesterday that it is prepared to provide additional accommodation if needed to support the economic recovery.
The Federal Reserve’s Federal Open Market Committee voted Tuesday to continue to maintain interest rates at near zero levels, keeping the target range for its federal funds rate at zero to 0.25 percent.
The central bank did not announce more quantitative easing, but signaled it may be compelled to undertake further asset purchases by year’s end.
“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate,” the Fed said, opening the door to QE in the medium term.
The Fed once again acknowledged that the pace of the economic recovery is slowing, with stubborn weakness in the jobs market bleeding into other segments of the economy, particularly housing and consumer spending. It also noted that employers remain reluctant to add to payroll and that housing starts are at a depressed level.
At 5:40 am ET Wednesday, the dollar fell to near a 5-month low of 1.3392 against the euro. The next downside target level for the dollar is seen at 1.360. The euro-dollar pair is now worth 1.3380.
The dollar slipped to a new 1-week low of 84.53 against the yen at 5:05 am ET Wednesday. As of now, the dollar-yen pair is worth 84.60 with 83.7 seen as the next downside target level.
The dollar’s slide below the 85.0 level against the yen spurred speculation today that Japanese authorities may intervene to curb yen gains after they resumed intervention for the first time since 2004 last week.
The dollar is presently trading at more than a 2-year low of 0.9905 against the Swiss franc. If the dollar slides further, it may likely target the 0.964 level.
At 5:40 am ET, the U.S. currency plummeted to an 8-month low of 0.7409 against the New Zealand dollar. On the downside, 0.764 is seen as the next target level for the greenback. The kiwi-greenback pair is now worth 0.7399.
Against the Canadian dollar, the U.S. dollar is currently trading at a new multi-week low of 1.0195. If the greenback drops further, it may likely target the 1.014 level.
Looking ahead, the U.S. Federal House Finance Agency-FHFA is set to release its house price index for July at 10 am ET.