The U.S. dollar came under pressure in European deals on Wednesday, as investors await the outcome of the Federal Reserve’s monetary policy meeting, with expectations that global market volatility and subdued inflation could deliver dovish statement.
The Fed releases its post-meeting statement at 2 pm ET.
The Fed is expected to leave interest rates unchanged, but main focus will be on the wording of the policy statement accompanying the bank’s decision. The consensus is that the Fed will deliver cautious commentary in the wake of mixed U.S. economic data, plunging commodity prices and sharp sell-off in stock markets.
Ahead of the Fed statement, the Commerce Department will release report on new home sales in the month of December at 10:00 am ET.
Economists expect new home sales to climb to an annual rate of 500,000 in December after reaching a rate of 490,000 in November.
The greenback was trading mixed in Asian trading, with rising slightly against the pound, while holding steady against the euro, yen and the franc.
The greenback reversed from an early high of 1.4284 against the pound, easing back to 1.4355. On the downside, 1.45 is possibly seen as the next support level for the greenback.
The greenback fell to 1.0130 against the franc, after having advanced to 1.0180 at 8:15 pm ET. If the greenback slides further, it may find support around the 1.00 region.
The greenback slid to a 6-day low of 1.0912 against the euro, compared to 1.0868 hit late New York Tuesday. The greenback may seek support surrounding the 1.10 mark.
The greenback weakened to a 3-week low of 1.4041 against the loonie, 2-day low of 0.6530 against the kiwi and near a 3-week low of 0.7069 against the aussie, off its prior highs of 1.4156, 0.6472 and 0.6992, respectively. Continuation of the greenback’s downtrend may lead it to support levels of around 1.39 against the loonie, 0.66 against the kiwi and 0.715 against the aussie.
On the flip side, the greenback recovered to 118.49 against the yen, from its previous low of 118.04. The next possible resistance for the greenback-franc pair is seen around the 119.5 region.
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