Forex Market Review – Dollar remains weak; euro holds onto gains

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Euro consolidated gains made on Tuesday after the Fed announced no change in monetary policy and pledged to keep interest rates low until 2014. EURUSD soared to a five-week high of 1.3119 after the news before settling into a range. The pair opened in Asia at 1.3105 and hovered around the $1.31 level.

 

The main driver behind the rise in the euro is the weaker dollar and not based on any fundamentals relevant to the single currency itself. Euro remains vulnerable due to the euro zone debt crisis, and the Greek debt swap negotiations are still ongoing.

 

GBPUSD remained close to the two-month high reached in the prior US session at 1.5677. Sterling surprisingly remains resilient despite weak GDP numbers released on Tuesday, indicating economic recovery in the UK economy is still sluggish.

 

USDJPY traded sideways after tumbling late Tuesday following the Fed statement which weakened the dollar across the board. USDJPY opened in Asia at 77.75 and eventually reached down to 77.55.

 

AUDUSD opened in Asia at 1.0595 to extended gains to 1.0636.

 

Dollar remains weak following the Fed statement. The ICE dollar index which measures the U.S. unit against a basket of six other major currencies, fell to 79.466, down from 79.563 late Wednesday in North America . It remains well below its 80.131 level it was at ahead of the Fed policy announcement.